[slimcustomer]

A withdrawl from an IRA for a downpayment on a house is often an excellent idea. Of course it is better if you can fund an IRA and save for a downpayment at the same time. Even with today's lower downpayment percentages, though, its non always possible to do both. Saving money towards the purchase of a first home intentionally in a traditional IRA can have multiple benefits. First of all, you are able to accumulate money faster because of the pre-tax nature of your savings. Secondly, people often enter a lower tax bracket upon purchasing a new home because of the ability to itemize deductions. Shifting your distribution to a lower tax bracket saves you money. Furthermore, you haven't "blown" your IRA investment. You have just shifted investment vehicles, with much of your future appreciation shielded from tax through the home sale exclusion.