Lender Advised Florida Couple to Withdraw Retirement Funds for Home Purchase

A Florida couple seeking to buy their first home said a lender recommended they withdraw funds from retirement accounts to cover the down payment. The couple contacted The Ramsey Show to discuss the suggestion. Hosts on the program stated that withdrawing approximately $36,000 would result in the loss of long-term compound growth.

One host noted that leaving the funds invested from age 30 to 65 could grow the amount to roughly $1.2 million. The same host added that early withdrawals would likely trigger taxes and penalties. The caller mentioned that employer matching contributions had increased one retirement account in recent years. Hosts responded that rebuilding the account would not recover the lost growth period.

The couple reported annual income of about $140,000 along with $30,000 in credit card debt and a $20,000 car loan. Hosts stated that carrying consumer debt while purchasing a home could increase financial pressure. The couple currently pays rent outside the city and faces a long commute.

Moving closer to work and daycare would raise monthly housing costs to approximately $3,500, an amount hosts described as too high relative to take-home pay. Hosts recommended the couple delay the purchase, pay off existing debt, and build an emergency fund before saving for a down payment.

One host estimated the couple would need an $80,000 financial improvement before being ready for homeownership.