Home Buying in 93535>Question Details

KB24_8, Home Buyer in Lancaster, CA

I have a 401K plan from my previous employer but no longer working for that company. My question is that I would like to take a loan against my 401K

Asked by KB24_8, Lancaster, CA Sun Jun 27, 2010

plan as to a new home buyer. It's my 401K so it would be a loan not a hardship loan for a down payment on a new house. How much can I take out? Is there any penalties? Thanks for all the help!

Help the community by answering this question:


There are guidelines that the administrator has for each program keep in mind that there is a limited amaount of thime before you will have to transfer those funds without incuring a penality from the IRS.
Also when you do a loan against the 401K it will be counted as part of the total DTI (Debt To Income).

Yes there are ways to structure the loan. Let me look at the complete picture then i will show you the most beneficial way structure your mortgage.


Start the process right 1st by talking to a Licensed Mortgage Professional to determine who much home you can afford and whether you are credit wordy and is there an ability to repay the loan.

The Mortgage Professional will give you a conditional approval letter to take to the realtor.

Once the realtor has found your home you should get it inspected to determine if it’s structurally safe (have the realtor recommend one locally) and be sure to ask your realtor to negotiate a home warranty paid by the seller.

Now is the time to determine and negotiate you rate and terms with the Loan Officer who is responsible to order an appraisal that you will be responsible to pay for prior to the arrival of the appraiser.

You’re Mortgage Professional / Loan Officer will be responsible to guide you the rest of the process and should not take more than 30 days.


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0 votes Thank Flag Link Tue Feb 26, 2013
If you no longer are employed by the company you can not take out a "LOAN" on your 401K

Loans made agaisnt 401K plans are repaid over time through payroll deductions. In fact, if you take out a loan on your 401 while employed , then quit the job the loan becomes due and paybale by you in full.

You may be able to do a "WITHDRAWL" from your 401 to buy a home, but before you do talk to your tax professional to make sure you do not run into trouble.

Best of Luck!
Kawain Payne, Realtor
0 votes Thank Flag Link Tue Feb 26, 2013
Depending on your plan penalties may apply--your best source of information is your tax professional and or plan administrator.
0 votes Thank Flag Link Sun Jun 27, 2010
Karen's right. I recommend calling your 401K company representative.

John J Mondello Jr, Realtor
Keller Williams
(225) 329-8119
"I find the house, you make it home."
0 votes Thank Flag Link Sun Jun 27, 2010
All plans are different. This isn't really a real estate question. You need to contact the manager of the plan. If you don't have their contact information, you will need to contact your previous employer.

This is a common way for buyers to get a down payment. Most plans do not require "hardship" for a loan. You will need to repay yourself with interest.

Best of Luck,

Karen Miller
0 votes Thank Flag Link Sun Jun 27, 2010
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