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03-11-2013 10:57 AM
03-11-2013 11:05 AM - edited 03-11-2013 11:06 AM
I don't think underwriters care whether you have money saved in 401k or 403b for retirement, they care whether you can meet the out of pockets costs to obtain the loan, and make your mortgage payments. I don't think what you propose would hurt you with an FHA loan. But that's just my guess.
03-11-2013 12:21 PM
I have heard many times that people use money from 403b/401k for down payment but here is my question.....will it matter if I darn near deplete my 403b to do it? I am talking about taking a loan for the max and then taking a hardship withdrawal for the rest. I am not worried about tax implications so just know that. I am just wondering if this will look bad to underwriting. i have never had a problem with people taking out a certain amount. max or not. it is your money to do with as you please.I am saving now but it will help me to buy my home sooner if I do what is planned. Waiting is not an option unless what I plan to do will cause me not to get the loan. I plan on going through FHA.
03-11-2013 02:50 PM
make sure you can actually borrow from it.
i have seen 403b's that did not allow distributions and loans.
03-11-2013 04:19 PM
03-12-2013 01:52 PM
Looking at your other posts I think you will have a problem getting that money out of your account. If you take the max loan, typically the lower of your total vested amount or 50% of your balance (or $50k but per your other post that isn't applicable here).
With all 3 of the 401k Plans I have had, you could not take a withdrawal if it would drop your total account balance below 2x your outstanding loan balance. I don't know that this is anything other than a plan policy but I am not aware of any plans that would allow it.
Obviously YMMV but I would call your plan administrator before deciding on this course of action. I would hate to hear that you withdrew the max only to see that your balance for a hardship withdrawal dropped to ) $.00