I understand a buyer can use his/her IRA money to purchase a property with zero or reduced penalties. What if you don’t have enough money in the IRA to purchase the property? Can you take, say a 20% down payment from your IRA to purchase the home? What is you are using the 20% for a rental property? Are there any restrictions to then putting that home in an LLC for protection?
You can convert your IRA into a "Self Directed IRA" (SDIRA) which then allows you to direct and choose your own investments.
You can buy say a rental and use SDIRA funds for a down payment provided the loan is “Non Recourse” and the loan is actually taken in the name of your SDIRA. You cover your SDIRA assets with insurance as in virtually all the US states you can not lose IRA assets to a lawsuit as an SDIRA can not be sued!
Obviously check your states specific protections for SDIRA accounts!
What is a non recourse loan?
Does it cots $ to cover your SDIRA funds with insurance?
A non recourse loan is one which the lender can not come back against the borrower to recover say a shortage in the event of a foreclosure.
Your not covering your SDIRA funds with insurance, you are covering the property you buy with insurance.
Keep in mind everything you buy in an SDIRA is arms length which means you can not manage your own investment.