Up to $10,000 of IRA dollars can be used toward the purchase of your "first home."
And if you're married, and you and your spouse are first-time buyers, you each can pull from retirement accounts, giving you $20,000 in residential cash.
THis waives this waives the 10% penalty but the distribution
is still taxable
Now, the IRS
definition of "first-time homebuyer." is important. You qualify under the tax rules
as long as you (or your spouse) didn't own a principal residence at any time during the previous two years.
Also the IRS says the first-time homebuyer using your IRA funds for a "first time home" can be you, your spouse, one of your children, a grandchild or a parent.
If this is a 401(k) the rules don't apply, so you'd need to roll (transfer is the better way) those dollars to an IRA first.
ALSO, a 401(k) plan CAN allow for a loan for residence and THAT TYPE loan can be repaid over a longer period than the 5 year payback period on any other 401(k) loan.
Let me know what questions you have...