From 24/7 Wall St. · Gerelyn Terzo · · 1m 20s
She'll Need $10,000 to Close on a Home at 62
A seller credit saves a 62-year-old buyer $12,821 from 401(k) withdrawal and $2,821 federal tax.
In brief
A seller credit saves a 62-year-old buyer $12,821 from 401(k) withdrawal and $2,821 federal tax. A 62-year-old buyer avoids $12,821 401(k) withdrawal and $2,821 federal tax by using a seller credit for closing costs. Originally reported by 24/7 Wall St..
Closing Costs at Age 62
A 62-year-old buyer needs $10,000 for eligible closing costs to complete a home purchase.
Tax Impact of 401(k) Withdrawal
Withdrawing $12,821 from a pretax 401(k) costs $10,000 after federal tax at 22%.
Seller Credit Saves Tax
A seller credit covers closing costs and avoids $2,821 federal tax for the buyer.
Social Security Taxability
Her provisional income passes $25,000, making part of Social Security benefits taxable.
Medicare Premiums
Her income at 63 sets Medicare Part B premiums at $81.20 monthly for 2026.
Seller Credit Limits
Conventional loans cap seller credits at 3% with less than 10% down or 6% with 10% down or more.
Price Cut vs. Seller Credit
A $10,000 price cut saves $2,000 at closing but lowers monthly mortgage payments by $51.
How to Use Seller Credit
Match the seller credit to closing costs, plan for $1,282 from 401(k) per $1,000 needed, and check income thresholds.
What matters most
A 62-year-old buyer avoids $12,821 401(k) withdrawal and $2,821 federal tax by using a seller credit for closing costs.
