Depending on the plan administrator and the way the plan was setup but most plans allow for withdrawl for medical bills and a home purchase. Whether it has to be paid back is another thing to find out about.

If its a first home loan ,then you probably will avoid the 10% penalty , but you
will still need to pay income tax on the money used.
Being it was never taxed , you have to pay taxes on the money , uncle sam
always gets his share.

It's never a good idea to spend your retirement funds for anything other than your retirement. Even if you avoid the 10% penalty, you'll see your income tax rate soar if you take out a large amount towards your home purchase.

Perhaps stop your contributions for a year, and save that money towards a home down payment instead.

You will avoid the 10% penalty if it is your first home loan. All withdrawals on a 401(k) are taxed at your usual income tax rate. It is just counted as added income for you. I would REALLY avoid taking a withdrawal for that purpose. The money is for your retirement and has a better chance of growing if you can leave it alone.

You can avoid all tax and penalties by just taking a loan out on your 401K. You do have to pay some of it back each month. In my plan I could take out up to 50%.

This actually worked well for me because the market tanked and then each month I was buying additional shares with my loan payment and getting the shares for cheap.

I read the other answers and do not agree. You can get some great deals on houses now.

It's great to have a big 401K if you already have a house. But if you do not already own a house, I would buy a house.

Hope this helps,

G

Yes I agree with the above taking a loan out on the 401K. It is a bad idea to mess with the 401K though. I would see what other options you might have, this would be a last resort option.