Downpayment option from 401K

[Seda Howe]

Is it a good idea to take out a loan against 401K for downpayment on a first property? Thank you!

[Stephen Dougherty]

I generally don't like the idea of borrowing against a 401(k) for any reason mainly because of risk that the loan will be called due to something outside of your control like losing your job.  I had a coworker who took a loan on her 401(k) to use as a down payment on her house.  Our company was sold 6 months after she took the loan which triggered her 401(k) loan to come due (we were all terminated and rehired by the acquiring company).  She defaulted, owed a bunch of taxes and penalties, and she nearly lost her house.