Presumably you are under age 59½, otherwise any distribution is tax and penalty free since you have had a Roth IRA for more than 5 years and there would be no need to use the first-home exception at all. Your original Roth IRA contributions (and amounts converted to Roth more than 5 years ago) are distributed first tax and penalty free, so it's unnecessary to apply the first-home penalty exception to that portion of a Roth IRA distribution. Assuming that you have made no recent Roth conversions, the first-home exception only needs to be applied only to the earnings that come out after your original contributions. Because you've had a Roth IRA for more than 5 years, the first-home exception will make the first $10,000 of earnings distributed be tax and penalty free.
