To withdraw housing funds when buying a home in the United States, individuals typically use retirement accounts like 401(k)s through loans or withdrawals, secure home equity lines of credit (HELOCs), or access state-specific housing assistance programs. For 401(k) funds, a loan up to $50,000 (or 50% of the account balance, whichever is lower) can be taken with a 5-year repayment period. Alternatively, a lump-sum withdrawal may incur taxes and penalties unless exceptions apply. HELOCs offer revolving credit based on home equity, with interest rates often variable. State programs, such as New York’s Home Energy Assistance Program (HEAP) or California’s CalHFA, provide grants or low-interest loans.

The primary methods are driven by accessibility and tax considerations. A 2023 Federal Reserve report found 15% of U.S. homebuyers used retirement account loans, with average amounts exceeding $70,000. HELOCs remain popular due to their flexibility; the Consumer Financial Protection Bureau (CFPB) noted 20% of homeowners with mortgages hold HELOCs, often leveraging them for down payments or renovations. State programs target low- and moderate-income buyers, with California’s CalHFA assisting over 100,000 households annually since 2020. Tax advantages for 401(k) loans (pre-tax contributions reduce taxable income) and potential penalties (10% for early withdrawals under 59½) make them a strategic choice for those with sufficient savings. However, HELOCs require equity, typically 20%+ for approval, and variable rates may increase costs. State grants, while limited, provide critical support, particularly in high-cost areas. Together, these tools help buyers bridge affordability gaps, though financial advisors often caution against over-leveraging retirement funds.