Can I borrow from my IRA to buy a house without penalty?

Not through a traditional loan mechanism. IRAs don’t have loan provisions the way 401k plans do. Taking money out of a traditional IRA before age 59.5 triggers
income tax on the withdrawal plus a 10% early withdrawal penalty in most cases.

There is a first-time homebuyer exception worth knowing. If you haven’t owned a primary residence in the past two years, you can withdraw up to $10,000 from a
traditional IRA penalty-free for a first home purchase. You still owe income tax on the amount withdrawn. For a Roth IRA open at least 5 years, you can withdraw
contributions at any time without tax or penalty, plus up to $10,000 in earnings penalty-free for a first home purchase if you meet the 5-year and first-time
buyer requirements.

That said, $10,000 covers a fraction of what most home purchases require today.

If you want to use retirement savings to invest in real estate without the cost of a premature withdrawal, the right structure is different: roll existing funds
into a self-directed IRA and have the IRA purchase investment property. Not your personal home. An investment asset. The funds stay inside the retirement account.
The IRA earns the rental income. You don’t take a personal distribution.

Your self-directed IRA can also borrow money to acquire property, but the loan must be non-recourse. An IRA real estate loan is secured by the property only.
You cannot personally guarantee it. Non-recourse lenders specialize in this market and work regularly with real estate IRA custodians to coordinate closings. If you’re considering pulling IRA funds for a personal home purchase, talk to a CPA first. In most cases, the tax and penalty cost of an early withdrawal is
higher than people expect, and the self-directed IRA real estate route preserves the tax advantage entirely.