In my opinion, no.
Of course I am a licensed loan originator that also has a degree in economics and is a big fan of holding a diversified portfolio of assets that include stocks (retirement) and equity in a primary residence. I mean sure, you gotta live somewhere right?
However, you should always consult with your own financial advisor and tax consultant in order to fully understand the financial ramifications of your decisions--as an economist I look at this as your Opportunity Cost.
I am a proponent of borrowing from your 401k which I think is better than a withdrawal because if you borrow the money from your own 401k plan you can pay it back to yourself so that you can avoid the 10% penalty for early withdrawal that you would likely owe the IRS as well as any income taxes assuming your 401k money is not a ROTH IRA and the funds are deposited into the 401k pre-tax.
Funds borrowed from your 401k (Most plans allow you to borrow up to 50% of the balance--check with your plans administrator) will not necessarily count against your DTI as long as you have enough money remaining in your 401k to pay back the loan should you lose or change jobs but some lenders may have their own restrictions or overlays regarding the use and purpose of borrowed retirement funds.
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Licensed NC Mortgage Loan Originator
