Using Retirement Savings to Buy a First Home: A Philadelphia Suburbs Guide (2026)

Some first-time buyers ask whether they can use retirement savings to help fund a down payment. A July 22, 2026 column in the National Association of Realtors® Economists' Outlook, by economist Nadia Evangelou, discusses that question directly. This guide paraphrases the NAR framing, adds Philadelphia-suburbs context, and lays out the tradeoffs in plain English. It is educational only — not tax, legal, investment, or lending advice.

The full cornerstone guide lives at /using-retirement-savings-to-buy-first-home; this article is the shorter, blog-format version.

What the NAR Column Discusses

In its July 22, 2026 column titled "Using Retirement Savings to Buy a First Home," NAR compares the tradeoff between keeping savings invested and using a portion toward a first-home down payment. For its comparison it uses a 10% assumed annual stock-market return and looks at $50,000 either invested or applied toward a $400,000 home. NAR also cites its own historical analysis that typical U.S. homeowners gained nearly $232,300 in equity over the prior ten years.

Both figures are NAR's — attributed here, not mine — and both are illustrative national analysis, not a forecast for any specific property or year. Read the original at https://www.nar.realtor/news/economists-outlook/using-retirement-savings-to-buy-a-first-home.

The Current $10,000 IRA Rule

Under current U.S. tax law, a qualified first-time homebuyer can withdraw up to $10,000 from an IRA and avoid the 10% early-withdrawal penalty when the requirements are met. This is a lifetime, per-individual amount. It is a penalty exception, not a tax exemption — Traditional IRA dollars may still owe ordinary income tax, and Roth IRA rules differ. Confirm current-year details with a CPA and IRS resources before you rely on any figure.

The Proposed $50,000 Bill (Not Current Law)

The Uplifting First-Time Homebuyers Act is a proposal that would raise the IRA first-time homebuyer exception from $10,000 to $50,000. As of this update it has been introduced but is not current law. Do not plan a purchase around a bill that has not been enacted.

What About a 401(k)?

401(k) plans are governed by their own plan documents in addition to federal rules. Loan availability, hardship-withdrawal rules, tax treatment, and repayment requirements vary by plan. Ask your plan administrator in writing what your plan permits — and what happens if your employment changes — before you rely on general online summaries.

Philadelphia Suburbs Context

Home prices, property taxes, and school-district costs vary meaningfully across the western Philadelphia suburbs, so a general national framing only takes you so far. In Wayne, King of Prussia, and surrounding towns across Chester, Montgomery, and Delaware counties, your total monthly cost depends on the specific township millage, school district, HOA (if any), and condition of the property — not just the sticker price. Any comparison should be built on realistic local numbers, not on national averages.

A Simple Decision Framework

Ask a licensed lender for a written comparison of your loan options at 3%, 5%, 10%, and 20% down for your target price and county. Ask a CPA to model the tax cost of any Traditional IRA withdrawal you are considering. Ask a fiduciary financial advisor to model the long-horizon opportunity cost of the withdrawal under conservative return assumptions — not only the 10% used in NAR's illustration. Ask your retirement-plan administrator, in writing, exactly what your plan permits. Only after those four written answers, decide.

Alternatives Worth Pricing First

Before tapping retirement savings, ask a licensed Pennsylvania lender to walk you through first-time-buyer program options, low-down-payment loan types, and any employer or family down-payment assistance you may qualify for. Program terms and eligibility change often and must be confirmed with the lender and with the program's official source before you rely on them.

Where I Fit In

As a Realtor®, I do not give tax, legal, or investment advice. What I do is make sure the home you buy is worth the sacrifice — right school district, sustainable taxes, sound offer structure. I refer clients to CPAs and fiduciary advisors in the Philadelphia suburbs who will run the retirement-withdrawal math honestly, and I put realistic local price, tax, and closing-cost ranges alongside their analysis.

Source and Attribution

Primary source: Nadia Evangelou, "Using Retirement Savings to Buy a First Home," National Association of Realtors® Economists' Outlook, July 22, 2026 — https://www.nar.realtor/news/economists-outlook/using-retirement-savings-to-buy-a-first-home. The 10% return assumption, the $400,000 home example, and the roughly $232,300 ten-year equity figure are NAR's, not mine. Local commentary is the author's. This article is educational and does not constitute financial, tax, legal, or investment advice.