The federal first-time homebuyer credit expired in 2010, but two questions still bring people here: what did it actually pay, and what does the $10,000 penalty-free IRA withdrawal cost today? This calculator answers both.
Every figure is produced by the same formula the calculator runs. Historic credit amounts reflect IRC Section 36 as it stood.
Profile: A $250,000 home bought in 2009 by a qualifying first-time buyer.
Profile: A $150,000 home bought in 2008.
Profile: A 2026 buyer withdraws $10,000 from a Traditional IRA for a down payment.
Profile: A buyer withdraws $25,000 from an IRA (the exception caps at $10,000).
Profile: A 2026 purchase with no IRA withdrawal.
Congress created a temporary federal credit to stabilize the housing market. There were two versions, and they were very different:
| Version | Max Credit | Repayment |
|---|---|---|
| 2008 purchases | $7,500 | $500/yr for 15 years |
| 2009-2010 purchases | $8,000 | None (if held 3 yrs) |
The credit was 10% of the purchase price, capped at the maximum, and fully expired on September 30, 2010. It has not returned.
What survives today is IRC Section 72(t)(2)(F): a penalty-free IRA withdrawal of up to $10,000 (lifetime, per person) used within 120 days to buy or build a first home. Qualified expenses include down payment, closing costs, and settlement fees.
Important: the exception waives only the 10% early-withdrawal penalty. If the IRA is a Traditional IRA, the withdrawal is still ordinary income — you owe income tax at your marginal rate. A Roth IRA withdrawal is tax-free if you meet the 5-year rule and it is a qualified distribution.
Many states and localities offer programs: down-payment assistance grants, below-market mortgage rates, mortgage credit certificates, and reduced-fee loans. These are not federal tax credits, but they can deliver more value than the old $8,000 credit over time. Search your state housing finance agency for current programs.
The 2008-2010 credit was the most generous federal first-time buyer incentive in U.S. history, and it was claimed by millions of households. Many buyers who used it later sold within three years and had to repay the 2009 version — a detail that still generates questions. If you sold a 2009-credit home within 36 months, the credit generally had to be recaptured on the next return.
Robbing a retirement account for a down payment is a real trade-off. A $10,000 Traditional IRA withdrawal that nets $7,600 after tax gives up decades of tax-deferred growth — at a 7% return that $10,000 could become roughly $76,000 over 30 years. The penalty waiver removes one cost, but not the opportunity cost. Compare against saving in a taxable account or using a Roth IRA (which has no tax on qualified withdrawals).
You qualify if neither you nor your spouse owned a principal residence during the 2 years before the purchase. The $10,000 limit is per person, so a married couple can use up to $20,000 combined. Qualified acquisition costs must be incurred within 120 days of the withdrawal.
⚠️ Important: This calculator is for educational and planning purposes. The federal First-Time Homebuyer Credit is no longer available; figures reflect the expired IRC Section 36 rules. IRA withdrawal rules, income limits, and state programs change frequently — confirm eligibility with a tax professional or your state housing finance agency before acting.