I was using the mortgage calculator to see if I could qualify to buy a home down the street from my mom’s house. If I don’t have a large enough down payment can I borrow the money from my 401K?

Mortgage lending guidelines allow borrowing against a borrowers existing assets as acceptable funds for a down payment.  A loan from your 401K is acceptable as is a home equity loan on one property to extract equity for a down payment on another or even a title loan against a car can be used as funds for a down payment.  You would have to consult a tax advisor to be certain that the loan from a 401K will not be assessed an early withdrawal penalty.  Anytime a potential borrower is estimating their short comings regarding either income or down payment, it is strongly advised that they use the mortgage calculators to see exactly what essentials of the loan requirements are missing.  If the mortgage calculator illustrates that a deficiency in the required down payment is present than the options to get through this impediment should be considered before giving up on the process of securing a loan.

This entry was posted on Thursday, December 11th, 2008 at 6:43 am and is filed under Mortgage FAQs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.