What is the penalty for withdrawing funds from a 401k account for a home loan down payment in texas?

Answer 1

Depends on the situation. Usually you can withdraw the funds without penalty for a first-time home purchase. Of course, you still have to pay the taxes on the money.

Answer 2

It does not matter what the reason you give. The IRS does not care.

10% penalty, then you also pay taxes by adding this amount to your regular income. This is because you never paid any income taxes on that part of your income that you put into your 401K. Understand?

So if you withdraw $20,000, and usually make $50,000,

you now have a 10% of $20,000 penalty; which is $2,000 plus,
you must also pay taxes on $70,000 of income, which will probably put you in a higher income bracket.

Now do you see that this is not a good idea.

Try buying FHA instead where they have low downpayment programs. You have to convince the seller to accept your FHA offer, and get the real estate agent to help you with this.
They must have the home free of any repairs needed after inspection, and the FHA has it's own inspection (lower cost) team, and the seller must make the repairs that the FHA finds, or you will not be allowed to borrow against that home.

Do you see how that protects YOU? You really don't want a home that doesn't pass, right?

I sold a homesFHA previously to an Asian family after I documented how in the last 10 years, every member of the family worked, after arriving and becoming US citizens by following the US regulations.

GOD bless.

Answer 3

If I was you I would find another way to get the money and not use your 401K. It you would listen to any financial advisors they would recommend that this account not be use, it is for your retirement. This should not be used as income to take out. The penalties and your retirement are not worth it.

Answer 4

I only had $1,700 in mine and they took almost $500 of mine here in WI when I withdrew mine early.