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will a 401k loan count towards my debt to the mortgage lender?

I want to take out a 401k loan to help with my down payment. this information would be helpful to me. by gabey.ahmad458 from Arlington, Tennessee. Dec 20th 2019 Reply


Nancy J Releford (nancyreleford)
#4 ranked lender in Tennessee - 229 contributions

Absolutely, just understand that depending on your 401K it still becomes a debt & you also may have to pay penalty.

Dec 20th 2019
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,097 contributions

Taking or borrowing money from a 401k retirement program is an extremely common and popular source of down payment money. You can usually take a permanent withdrawal from most 401k programs WITHOUT penalty to buy a home, or save a home from foreclosure. You will get a 1099 for the "income" at the end of the year, but no penalty. On the other hand, you can almost always take a 401k loan too. As it is a loan, you will be required to pay it back to your 401k, so there are no penalties or anything. Most let you borrow up to 50% of what is in your account. Finally, contrary to previous incorrect answers, traditional loan programs DO NOT count 401k loans into your debt-to-income ratio. I lend in the upper midwest states of WI, MN, IA, ND, SD. Click on my name or got to JoeMetzler.com for more information. NMLS 274132

Jan 19th 2020
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John Burke (jburke)
#29 ranked lender in Texas - 227 contributions

Hi Gabey,Yes, you can take out a loan against your 401K to help with your down payment & NO it will not count towards your debt!| John Burke | Senior Mortgage Banker | Lending in ALL 50 states |Great Plains Bank | jburke@gpbankTX.net | (877)228-9069 | NMLS# 787231 |

Feb 13th 2020
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