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@IOBA wrote:Maybe Shane or one of the other mortgage guys can pop in and offer some clarification.
The best suggetion I would have for OP and anyone else who is curious --- call your lender and ask.
IMO, it is a debt that needs to be paid back and the amount is deducted from your gross pay and should be considered in the big picture.
And for the OP - check to see if you can take out multiple loans from your 401K. Most only allow one loan in a certain time period. And it would need to be paid back in full before they would consider allowing you to do another loan. And why would you need to borrow money now from it, and then later for a down payment? As tough as it may be, the better option might be to wait a bit longer and try to save up some of the money needed for down payment on your own, without having to borrow it from your retirement.
DH's employer will allow only ONE loan within a 2 yr period. And you must have paid back the first loan first, 24 months must have passed since the first loan was taken out, and there must be at least 6 months in between the last payment made and a new application. Definitely check with your employer!
See the link I included above. Shane's response was that it doesn't count for DTI.
Thanks Walt_K.