What are good options for a first time homebuyer to access his 401k for the purpose of buying a home.?

Best Answer:

egypsies: There are no real "good" options. Accessing a 401k, even for a home purchase, should be considered a last resort.

The only relatively good option is to see if you can borrow from your 401k.

Pros – No taxes or penalties.
Cons – The money has to be paid back plus interest. Basically, your take home pay takes a hit for the next five years.

The bad option is to withdraw money from the 401k if your plan allows it.

Pros – It doesn't have to be paid back.
Cons – Taxes plus a 10% penalty if you are under 59.5 years old. The exception to the 10% penalty for first time home purchases applies to IRAs but not 401ks.

Other answer:

NONE of the options are considered "good". ANY personal finance adviser will tell you that is it a horrible idea in the long run. If you cannot save for a small down payment….you probably do not have the cash flow to be a home owner. If you think mortgage and utility payments are all you need to worry about…..you are in for a RUDE awakening once you own a home.
Cathi K:
None. Penalties and additional tax are too much. It isn't a good idea but you might be able to take out a loan against it. You lose interest in the account but you pay interest into it and there are no penalties or taxes. If you leave the company or fail to repay the loan then they report it as income and you still pay the taxes and penalties on any unpaid amount.
real estate guy:

The ONLY!!! reason for a 401k plan is for retirement. Any other reason is not good. If you want to buy a house, save for the house WHILE saving in your 401k.

However, you can borrow against your 401k plan. NOT A GOOD IDEA.

There are no good options to access 401k money unless you are old enough to not get hit with penalties.
That's not really a good idea, as many financial planners will tell you. For one thing, there's the tax and a penalty on the 401k funds.
Don't use 401K money. Go with an FHA loan with as little as 3.5% down. And in many areas there is down payment assistance. Check with a mortgage broker.
using your 401(K) for buying a home has no advantages in any way, other than providing you the money for the down payment
now taking your IRA for a first time home buyer will allow you to avoid the penalty for early withdrawal prior to age 59 1\2 but either distribution is income to you and taxable
none..unless maybe there is a million bucks in it

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