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Investing Specialists

Examining the Funding Options for First-Time Home Purchases

You may be able to skirt taxes and/or penalties when withdrawing from retirement accounts to buy a house, but some options are better than others.

This spring's housing market has been described as the "strongest seller's market ever," thanks to tight supply of homes for sale as well as still-low interest rates. Among those flocking to the market are younger buyers: For four years running, the largest share of homebuyers fall into the age 36 and below demographic, according to a report from The National Association of Realtors.

Some of these young buyers might naturally look to their retirement savings to help fund their purchases. After all, the stock market has been rising right along with real estate prices, meaning that many IRA and 401(k) balances look tantalizing large. And for better or for ill, the tax code makes special provisions for some types of retirement-portfolio withdrawals to pay for first-time home purchases.