I'm not sure what it means that you're not working, but I will assume that you are considered a terminated employee from the employer who sponsors the plan.

Since only an active participant can take a loan, that would not be an option for you, even if the plan allows it. That leaves two possibilities.

You could take a hardship distribution if allowed. Not all plans allow it and for those that do not all of them would allow this for a terminated employee, so you'd have to ask the plan sponsor. Avoiding eviction is a valid reason for a hardship. In this case you would pay taxes at your tax rate and a penalty of 10%.

If a hardship is not possible and you are terminated you could simply take a distribution. Some plans will allow a partial distribution which allows you to take only a certain amount which means less tax and penalties for you, but this is not common. Most will make you take it all, in which case you'd pay taxes at your rate and a penalty of 10%.

Another option might be to rollover to an IRA and, in doing so, take a distribution of part and rollover the rest. Think of this as two transactions from your current account. That would leave the amount that ends up in the IRA tax deferred still and with no penalty and you'd only pay the tax and penalty on the distributed amount.

Another question may be, okay, so you cash out your 401k, which will likely be cashed out at around 60% of face value due to penalties and taxes, how do you expect to pay your real estate taxes once the house is paid off? If the situation is dire enough to suggest that you cannot afford to pay your monthly mortgage, then how will you pay the annual taxes? If you don't pay the taxes, you are still subject to losing your house.

Obviously I am sure you have it in your plans to be back to work at some point in time. But consider as well that you'll likely need to work considerably longer if you cash out your retirement fund. Is it really worth it? Is there anything else you can do?

And let this be a lesson to anyone not currently saving their money to some extent. If you find yourself in a situation where you've been working, and have now lost your job, and are now facing tough financial decisions, you aren't doing it right. You should ALWAYS have some form of savings to fall back on OTHER THAN retirement funds.

I'll spare you the details of my 80/20 ideas. But I can tell you that if you look hard enough, I've talked about it enough here on this site, you can probably find some rendition of it. Follow it. Live by it. And let life deal all the cards it wants to against you, and it won't matter because you'll have the means to choose, rather than have decisions made for you through circumstance and poor planning.

Its a catch, depending how much you have, if you take all your 401k out you only get hit once with taxes and a 10 % penelity, were by doing it over a couple years keeps your income down, but again getting hit with the 10% penelities. The way i see it is the debtor is subject to the leander, none of know really what the future holds, many analaysis, the people who play with our money, paper shuffelers make money on our money. want our money to play with, gives them a job. For me all i see you doing is moving your assets from one place to another, for example they all say the stock market will rebound, but many of us have lost a great deal of money that we have worked very hard to save, and now we are faced with us loosing our homes, due to the economy. Although the real-estate bubble has now popped so now would be a great time to re-finance or pay it all off, no monthy house payments, which most of which we pay is interest anyway. Think of all the money you will save over the life of the loan for a morgage, add it up, quite a bit. Also historically the only asset that will appreciate is real-estate, so its a safer investment, your home could be worth double of whats its worth now in the next 20 or so years. So if they cry of all the money you will loose, like 38% of your total 401k, so what you will not loose your other investment, your house, you can always start another 401k, and the kicker will be hopefully youll be debt free, living the good life, alot more less stressfull