This is a great incentive offered by the 401k plan . Why not use it? I believe you may borrow up to $10,000.00 for the purchase of your first home. It would be untaxed and with no penalties. I would suggest calling your 401k plan to confirm this information. I recently sold a home in Sunrise, FL where my buyers borrowed against their 401k and were delighted that they had that source and incentive available to them. Best Wishes! Maribel - Coldwell Banker Residential Real Estate : 954-268-3975.