Wendy from North Carolina says, I'm single, 29 years old, and have a good job that I plan to keep for a while.

I'm considering taking a loan from my 401k to buy a home. I know it's better not to touch the account,

but it's the only way I can come up

with a 20% down payment. What do you think? Should I borrow from my 401k to buy my first home

or keep renting? Thanks for your great question, Wendy. This is a classic dilemma, especially for

first-time homebuyers. To help Wendy and anyone facing a

similar situation, I'm going to first outline key considerations about using a retirement account

loan to buy a home, and then we'll explore its pros, cons, and some alternatives.

Hey, everyone, welcome back to Money Girl. This is episode 1008, and it's

Finance Friday. This is the show where I answer your burning money questions. I'm Laura Adams,

an award-winning author, spokesperson, money speaker, and founder of the Money Stack. That's my

substack newsletter. You can sign up for the Money Stack and learn more

at laura d Adams.com. All right, so let's talk about a 401k or, you know, other types of retirement

plans that you might find in the workplace. If you're fortunate enough to have one of these,

it could be a 401k, 403B, or maybe a

457 plan, they come with some terrific benefits. You elect to have your company deposit a

percentage or a flat amount from each of your paychecks into your account. And if you use a traditional retirement account,

your contributions are tax deductible. And the funds don't get taxed until you take

withdrawals in retirement. If you have the option to use a Roth, Roth accounts require you to pay

tax up front on contributions, but your withdrawals in retirement are entirely tax-free.

Now, another Roth benefit at work is not having an income limit tied to your eligibility.

That's different from a Roth individual retirement account or Roth IRA because a Roth IRA disqualifies high earners

...