Take a 401k Loan to Make 20% Down Payment?

[anonymous_saver]

Hey, don't give up on the first time credit so easily!

As with all things, there are rules and loopholes. First time homebuyer is defined as not owning a home in the last 3 years.

One of my co-workers is buying a first home with her boyfriend (they should get married, but that is too old-school I guess) - since they are unmarried, but buying the house jointly, they both qualify for the credit - so they are getting $16k together. Who would have thought?

You are taking on alot all at once. You will spend ALOT of money setting up your new home. Tread carefully and good luck.

If two unmarried people buy a house for the first time, they only receive $8,000. Not $16,000. Sorry to say it but your friends are missinformed. I'll look for a link so that you can have some proof to show your friends.

This quote below is for the $15,000 credit that is currently being discussed, I found it on opencongress.org: (I will look for the current bill too, but I'm fairly certain it's the same idea, if 2 unmarried people buy a new home, they will only get the $8,000 combined (i.e., $4,000 each):
‘(B) UNMARRIED INDIVIDUALS- If 2 or more individuals who are not married purchase a principal residence, the amount of the credit allowed under subsection (a) shall be allocated among such individuals in such manner as the Secretary may prescribe, except that the total amount of the credits allowed to all such individuals shall not exceed $15,000.

Also, please don't assume everyone should get married who are in committed relationships. It's not right for everyone.

Good luck to your friends!

[wnlbutterfly]

I was going to ask also if you currently own or when it was you owned last for that very reason.

Well, that is a slippery slope there on the unmarried. Because IRS may not catch it if they file single, I know they don't catch the unmarried couples that live together and split up the kids to get EIC. They aren't suppose to do that, but a LOT of people do it. And IRS at this point in time, doesn't cross check addresses from what I have heard.

If your friends do this (and they may already have since they can amend last year and claim it now instead of waiting), you might give them a heads up that IRS might just want some of it back....hmm?

[wnlbutterfly]

To the OP, sounds like you have a really good plan overall and have done wonderfully in the past. I think you can do it, borrow and avoid the PMI, use the money you would have had to pay to repay the loan. Just might have to wait on a few "new" things while you build it back, it is very tempting to go out and buy new everything for a new home.