Any reason to not use first-time home buyer Roth IRA?

[jjcamembert]

I am purchasing my first house and am trying to figure out the best way to fund the down payment. I have enough money in savings outside the Roth to put 20% down, so I'm wondering if I should even bother taking away from my tax-free investments. But, let's say I want to buy another house in the future; then I could no longer use the "first-time home buyer" clause, but I could still take out base money that's been in there for 5 years, right? What's been your experience, or what do you recommend?

(Note: Wife also has Roth IRA, so we could tap both, one, or none)

Thanks!

[DrF]

I think the "first time buyer" status gets updated as long as you haven't owned a home for at least 2 years.

Also, you can withdraw any amount of money you put into your Roth at any time. You just can't withdraw interest. If you convert money from a "traditional" retirement account to a roth, that's when you have to wait 5 years.

I think there's a $10,000 limit you can pull from the roth under the first time buyer plan (not sure if it's total, or per person).

[Mother Fussbudget]

You have 20% available in cash, I would say use cash, and let the money in the roth continue to grow.

The $10,000 first-time-home-buyer thing is a 'lifetime limit' from an IRA/RothIRA toward a home purchase - such as a down payment.
The money taken out would be tax free *IF* held for over 5 years.  It's taken out in this order: 
  1) annual contributions, 2) conversions, 3) earnings. 

And as DrFunk says, the IRS rules define 'first time home buyer' as someone who hasn't owned a home in 2 years.  So, if you ever want to use the Roth for a down payment in the future, you would sell your home, move into an apartment for 2+ years, THEN buy as a 'first time home buyer'.

[forummm]

Use the cash. Once you take out your contributions from prior years, you can't go back in time and put them back in. That tax advantage is lost forever. You could raid your IRA in the future for another house. But you won't need to. You'll have saved up more and more every year because you are a mustachian! And you will have all the proceeds from selling the house you are buying now.

[Gone Fishing]

Use the cash. Once you take out your contributions from prior years, you can't go back in time and put them back in. That tax advantage is lost forever. You could raid your IRA in the future for another house. But you won't need to. You'll have saved up more and more every year because you are a mustachian! And you will have all the proceeds from selling the house you are buying now.

+1

[Eric]

Use the cash. Once you take out your contributions from prior years, you can't go back in time and put them back in. That tax advantage is lost forever. You could raid your IRA in the future for another house. But you won't need to. You'll have saved up more and more every year because you are a mustachian! And you will have all the proceeds from selling the house you are buying now.

+1

Agreed.  That Roth loophole is for people who can't save money otherwise.  There's no reason to deplete that account that will grow tax free forever when you have other options.