Function

• You may take a penalty-free Roth IRA distribution to make a down payment on your first home. You may also withdrawal money to put a down payment on the first home of a child, grandchild or ancestor--either yours or that of your spouse.
  
  

Distribution Cap

• As of 2010, you may withdrawal up to $10,000 from your Roth IRA without penalty for "qualified acquisition costs." This includes costs associated with buying, building or rebuilding a home, as well as closing costs. The limit is currently a lifetime cap.
  
  

Five-Year Rule

• You can only qualify for a penalty exception as long as your Roth IRA has been open for at least five tax years. The five-year period starts on January 1 the first year you made a contribution. If you were to make your first Roth IRA contribution in April 2010 and apply it to 2009, the period would start January 1, 2009.
  
  

Principal Residence

• The home in question must be your principal residence or that of your beneficiary. To qualify, neither the purchaser or her spouse may have owned a principal home within two years.
  
  

Time Frame

• After you take a distribution, you have 120 days to apply it towards the cost of a home purchase. If your plans were delayed, you could re-contribute the money within the 120-day period as a rollover.