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One of the most important financial goals is saving for retirement. However, putting money into a 401(k) or IRA could get sidelined if you’re trying to save for a house. After all, you might think, you’ve got to live somewhere now and retirement may seem impossibly far away.

But that kind of thinking is short-sighted. You might not be able to max out your 401(k) contributions, which for 2018 was capped at $18,500 per year for people under 50, while you’re stuffing your down-payment piggy bank — but saving some retirement money is far better than nothing.

“It’s critical to save for retirement even if you’re saving for a house. If your employer matches your 401(k) contributions, then contribute up to the match,” says Joel Shaps, managing director of Silicon Valley United Capital. “The minimum I would save is the matched contribution because that’s like free money.”

Savers can also put their money into an IRA, which is designed for retirement. A traditional IRA allows you to save pre-tax money and build up your nest egg, which is only taxed once the funds are withdrawn. A Roth IRA taxes the money upfront, before it’s invested, so you don’t have to pay taxes when you start drawing from it.

Using retirement money for a house

Financial experts universally frown upon withdrawing retirement money for anything short of an emergency, and this includes buying a house. However, there might be circumstances that justify using some of your retirement savings for a home purchase. For example, if you come upon a great deal and don’t have access to a down payment. You can tap your Roth IRA or traditional IRA for up to $10,000 without penalty or tax for the purchase or remodel of a first home.

The same leniency doesn’t apply to 401(k)s. If pull money before age 59.5 from your 401(k), with a few exceptions, you’ll be assessed a 10 percent early-withdrawal penalty on the amount you withdraw and you’ll have to pay income taxes on that money. Using 401(k) funds is clearly a last-ditch solution for coming up with down-payment money. You may, however, be able to borrow money from a 401(k) to buy a house. The IRS allows someone to borrow up to 50 percent of his or her vested account balance or $50,000, whichever is less, for a primary residence purchase.

Short-term savings options

If you plan to buy a house within five years or less, then you probably don’t want to save your house money in something volatile like the stock market.

The stock market is for people who can keep their money in long term, which is a minimum of about 10 years, Shaps says. For short-term savers, FDIC-insured products are best.

Think money market accounts, Treasury bonds, and CDs. If you want to try to earn a bigger return and can handle higher risk, you could put some of your savings into a diversified portfolio of peer-to-peer loans, which could offer north of 7 percent annual returns. The risk is that the borrower(s) stops repaying the loan.

Look at low down-payment loans

Consider how you plan to finance that new home. You can finance it with as little as 3.5 percent down with a Federal Housing Administration, or FHA, loan. Other low or no down payment options exist through Fannie Mae, Freddie Mac, Veterans Administration, and the USDA Rural Development Program. While there are costs associated with this type of financing — including mortgage insurance premiums (PMI) — you can balance those costs against the potential for rising home prices and mortgage interest rates.

Compare the options available with the costs of conventional financing. You may decide it’s worth it to go with a low down payment program and get into your first home sooner, rather than saving up for a 10 percent to 20 percent down payment.