Should You Tap Your 401(k) for an LA County Down Payment?
Should You Tap Your 401(k) for an LA County Down Payment? Using your 401(k) for a down payment in Los Angeles County? California adds a 2.5% penalty on top of the federal 10%. See the real cost and cheaper options. Quick Answer: You can use your 401(k) for a down payment. A withdrawal before age 59½ costs a California buyer 12.5% in penalties: the federal 10% plus California's 2.5%. Income tax lands on top. The median Los Angeles County home sold for $888,120 in July 2026, and 3.5% down on that price is about $31,084. Can you use your 401(k) for a down payment on a house? Yes. Most plans give you two doors: a hardship withdrawal or a loan against your balance. Neither one is free, and they work very differently. A withdrawal takes the money out permanently. A loan puts it back over time with interest you pay to yourself. The IRS does not offer a first-time buyer penalty exception for 401(k) plans. That exception only exists for IRAs, and it's capped at $10,000 over your life...