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Can I borrow from my 401k to buy a house?

Jan 05, 2012 by Cory from San Diego, CA  |  Flag
2 Answers   |  6 Followers
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7 votes

Some typical factors would be 1) does your plan allow for loans; 2) what are the terms of repayment; 3) are the less expensive areas to borrow from; 4) can you repay the loan if you lose your job. When you "borrow" from your 401k, you are "leveraging" the amount you have in the plan, hence, most plans will charge you interest. David, there is also a time limit generally to pay that loan back. If you fail to pay the loan back under the agreement, you will experience an early payout for the balance remaining unpaid, which may be subject to the 10% penalty if you are under age 59 1/2, plus the tax due. Every dollar you consider using has a cost to it. Review all pools that may be acceptable to you to find the least expensive avenue, with the least amount of risk to you.

1 Comment   |  Flag   |  Jan 24, 2012 from Grand Blanc Township, MI
kevin

my 401 plan is through plastics engineering company, I with drew money back in 2003 to buy a home(down payment), I was wondering If plan will allow me to withdrawl a a small amount for the same reason again, what are the rules??

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Flag |  Feb 19, 2012 near Sheboygan, WI

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4 votes
Mike Kane Level 15

That depends on your plan's provisions. Most plans permit a hardship withdrawal, which could be used for buying a house.

1 Comment   |  Flag   |  Jan 20, 2012 from Alpharetta, GA
David

What are some typical factors in deciding whether you would want to borrow from your 401k? Does borrowing from your 401k involve paying interest on the amount borrowed?

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Flag |  Jan 20, 2012 near San Diego, CA

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