Saving for a down payment MMM style

[Gin1984]

So DH and I save about 40% of our salaries but the majority is pre-tax.  We are talking about buying a house in the next few years and are trying to decide how to save the down payment.  Would you save less pre-tax until you have enough for the down payment, pull from the Roth IRA while putting an equal amount back in pre-tax, or invest normally until you knew what you were going buy then pull down to just the match to save the down payment? 

[Civex]

PTF. We are debating on a change of scenery in the next few years and this has been on my mind. We're saving >50k/year, but it is also all in tax advantaged accounts.

[Chrissy]

Invest less pre-tax, starting with taking the 401ks down to just the match.  I would never pull from ROTH. 

[Gin1984]

Invest less pre-tax, starting with taking the 401ks down to just the match.  I would never pull from ROTH.

You'd do that a few years away, not within the year of buying?  Why?  Also, why would you never pull from a Roth?

[boarder42]

Alright pulling from a Roth isn't bad necessarily. If you can't max all retirement accounts and save for a down payment. Why not put the funds in a Roth you can always take out the contributions and treat that as your savings for house. And then the gains are protected from tax. This is better than my suggestion was actually going to be.

You said next few years which means you don't have a finite time frame IMO I would either do the Roth thing or put it in a brokerage account if the stocks tank wait to buy if they go up with a taxable you'll have more down payment. With Roth you'll have more tax free for retirement.

[Bracken_Joy]

Posting to follow, since I'm curious on the thoughts here.

Ideal would obviously be find side hustles or cut expenses so that savings can remain the same, AND you can save for a down payment. Not always a reasonable option though! Basically what we opted for, though- shitty neighborhood rental and a roommate for a year really accelerated the savings.

[Gin1984]

Alright pulling from a Roth isn't bad necessarily. If you can't max all retirement accounts and save for a down payment. Why not put the funds in a Roth you can always take out the contributions and treat that as your savings for house. And then the gains are protected from tax. This is better than my suggestion was actually going to be.

You said next few years which means you don't have a finite time frame IMO I would either do the Roth thing or put it in a brokerage account if the stocks tank wait to buy if they go up with a taxable you'll have more down payment. With Roth you'll have more tax free for retirement.

You are right, we don't know when we will be buying.  DH will find out if he is getting tenure track in two years, if yes we plan to buy in about a year, if no we may move and if we move to somewhere with tenure track, again about a year before we'd buy.  But those are the best case and things can change in two to three years so we are not sure.

[Chrissy]

Invest less pre-tax, starting with taking the 401ks down to just the match.  I would never pull from ROTH.

You'd do that a few years away, not within the year of buying?  Why?  Also, why would you never pull from a Roth?

Because it would take years of doing it to work up the $120k we would need to buy the crappiest SFH in our neck of the woods. 

I wouldn't pull from ROTH because you can't put it back.  However, if you plan to go this route, you should know that you can take your contributions AND $10k of earnings, penalty free, if you're first-time homebuyers.