Which scenario allows a consumer to use Roth IRA funds for a down payment on a home purchase?

The choice that allows a consumer to use Roth IRA funds for a down payment on a home purchase is the scenario involving Nevil withdrawing $8,000 after five years for his first home. This is correct because Roth IRA contributions can be withdrawn at any time tax- and penalty-free; however, the withdrawal of earnings is subject to certain conditions.

For first-time homebuyers, the IRS allows individuals to withdraw up to $10,000 in earnings from a Roth IRA without incurring taxes or penalties, provided that the account has been open for at least five years, and the withdrawal is used to purchase a principal residence. In Nevil's case, since he has completed five years with the account and is using it for his first home, this qualifies him for the exception.

The other scenarios do not meet the requirements set by the IRS for penalty-free withdrawals. Withdrawing funds for a vacation or second home would not qualify as a first-time home purchase and would typically result in tax implications and penalties if they involve earnings instead of contributions. Similarly, withdrawals for home repairs would not be classified as a qualified first-time home purchase, which means they would not meet the criteria for penalty-free withdrawal of earnings.