> Am I wrong for being excited by the prospect?

Quite possibly. You didn't say anything about your current credit rating, income, outstanding debt, emergency savings, etc.

I would also say that if you have to withdraw from retirement in order to make a 3.5% down payment, you are PROBABLY not in a position to purchase a house.

10,000/3.5% is 286k, not 350k.

You still have to pay for the rest of the mortgage

I would not withdraw from my retirement accounts to buy a house. I would apply patience, save up the cash for the down payment.

"leveraged asset": no, i do not think so.

You’re missing some nuance and your math is off, but yes (kind of).

First, don’t confuse penalty free with tax free. If you withdraw $10K from a Traditional IRA for a first time home purchase, while you don’t have to pay the 10% penalty you normally would, you do have to pay income taxes on the whole thing. So you wouldn’t actually net $10K.

Your math is also off. To figure out how big of home $10K supports if that’s a 3.5% down payment, divide $10K by 0.035. The answer is $285K, not $350K. 3.5% of $350K is $12.250.

There are closing and ownership costs too. Maintenance, property taxes, home insurance, etc.

Finally, houses don’t always go up. In fact, many people are currently worried about home values going down. Leverage is great if you can use the bank’s money to make money, but not so great if you lose money. You still owe the bank their money even if your home loses value. Historically, home prices have risen a bit faster than inflation over the long term, but not as much as stocks and financial investments. So the money you’re taking from the IRA probably would have been earning more where it was.

So there’s a grain of truth to your thinking… but not nearly as favorable as you think.

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As somebody that made poor financial decisions in my younger years and did this exact same thing for my first house I say do not touch your retirement funds. That was a few decades ago and I still regret touching retirement funds

I could have got the house without tapping my retirement

And using an online stock market calculator that 10k then would be worth 50k today if I had kept it invested

If you are withdrawing from a traditional ira to buy the home, you would most likely not pay the penalty, but you would still pay the taxes on the 10k, and the taxes would be dependent on your income.

Using money from retirement funds is not something I would do. It will cost a lot more from compounding in the future. I don’t borrow from the “future me” anymore. If you’re that jammed for a down payment, I believe that means you aren’t ready yet. Home ownership is always more costly than people expect.

I’d Cash flow the down payment and leave the retirement alone.