Buying my first home, Withdraw from IRA for down payment or use FHA with DPA

[Richard Ship]

Hello,

I'm looking at buying my first home, Currently I rent.

The House was listed at 78,900, I offered 73,000 and they countered to 75,000 which I accepted with the seller paying closing costs.
Tomorrow I go to withdraw my Escrow money from the bank and I'm locating a home inspector.
Right now I've been offered an FHA loan a 4.375% using a down payment assistance program that would grant me 3% down that I would not have to repay if I keep the house more than 5 years.
An alternate I have is to withdraw up to $10,000 as a first time home buyer my IRA and use that for my down payment, I do not know what my interest rate would be yet if I did so.

Doing some reading it looks like I'll be taxed at 25% on the withdrawal from the IRA.

How can I decide which is the better option between the FHA with down payment assistance or doing the 10% down with a withdrawal from my IRA?

[waltworks]

You are in the 25% tax bracket and can't come up with $15k for a downpayment without going into retirement money? WTF?

Don't buy the house at all if you don't have your finances in order already, that's my advice. Saving a 20% DP on a $75k house should be child's play if you even vaguely have a decent job.

-W

[monarda]

I agree with Walt
You shouldn't be buying a house yet. Save for a proper 20% down payment. Get your finances in order. Buy a house next year, or after you've saved enough.

[ShoulderThingThatGoesUp]

Yep. Better to lose the earnest money than to go through with this purchase that you're not ready for.