401k Loan -> House Downpayment

[6FeetUnder]

Hi Everyone,

I just wanted to get everyone's thoughts on taking our a 401K loan to put down a downpayment on a house?

My 401K is doing very well right now (>35%), but I'd like to take about 40% of it out to put down a down payment on my first house. I'll be able to pay the loan off when I get the $8K next year.

Thoughts? Possible downfalls?

Thanks!

Chris

[disneysteve]

Your 401k is a RETIREMENT fund.

It is NOT a down payment fund.
It is NOT a new car fund.
It is NOT a college savings fund.
It is NOT a 'pay off the credit cards' fund.
It is NOT a vacation fund.

Get the idea?

You should absolutely not borrow or cash out 401k assets for anything but retirement with the possible exception of a truly dire catastrophe. Something on the order of a family member in need of emergency life-saving medical care might qualify.