If you used 401k loan for mortgage down payment, how much percentage of 401k total did you use?

[Anonymous]

Borrowed 45k to avoid PMA and have some cash reserves. Have to pay it back over 10 years even if leave job but on track to have it repaid in 3. Would have done in 2 but DH wants to keep more cash in emergency fund.

[Anonymous]

I think that we're also planning to use 401k as a bridge loan, when we sell and buy in a couple of years. I'd prefer to buy our next house and THEN sell our current one, rather than vice versa. We have more equity than we'll probably need for the next down payment, so even if we don't get our full asking price on our current house, we should be ok.

Yeah - there's some risk to using 401k/tsp as a loan, but so long as it's paid off fairly quickly, I think that it's a manageable level of risk. One of us is a fed while the other has been in the same job for 20 years. If one of us did happen to lose our job, the worst case scenario would be taxes and a $5k penalty hit (10% of $50k, which is the max we could borrow) - annoying, but not the end of the world. I can live with that level of risk.

[Anonymous]

A family member took out $50k. Their realtor said this was a common amount.

OP, could you please post a new topic called "Please give me your opinions on whether I should take out a 401k loan for a mortgage down payment?" It looks like people are just dying to respond to that question.

[Anonymous]

We did it and it worked out great. I think we took out $30K which was the majority of our downpayment on an FHA loan (I think 401k was around 100k at the time?). Paid it back over 4 years. Our HHI was/is decent and we could afford the payments, PMI, etc. Job risk wasn't substantial though it's never non-zero. We wanted to get into a house and neighborhood based on where our life was (kids); not wait another year or two and not focused on maxing investments and minimizing risk. As it happens we refi'd into a great conventional loan within 3 years, our house is up $200k in four years, and our kids have spent their pre-K and ES years in a house/neighborhood/school that we loved.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think there is a limit in dollar amount that you can borrow, isn't is $50,000? I don't know if there is a percentage amount.

50k or 50%, whichever is smaller. Not all 401ks even allow loans

This is the rule for my 401k too.

[Anonymous]

I took out $25K and am REQUIRED to pay it back over ten years (For some reason, I am not allowed to pay it back early unless I leave the company).

[Anonymous]

Anonymous wrote:Borrowed 45k to avoid PMA and have some cash reserves. Have to pay it back over 10 years even if leave job but on track to have it repaid in 3. Would have done in 2 but DH wants to keep more cash in emergency fund.

How is the loan structured so that you aren't subject to the 60 day payback if you leave your job?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would only do this if the market were in the toilet. Im making 17% returns on my 401k. Over 2 years that could be a loss of $17,000. Compoind that 17K over the next 20 yesrs? Thats just a stupid way to scrape together money. Hell no.

What are you invested in? Funds? Which ones!!

I'd have to login to look. I just go with high risk funds. Through fidelity
Nothing complicated.

[Anonymous]

Anonymous wrote:I took out $25K and am REQUIRED to pay it back over ten years (For some reason, I am not allowed to pay it back early unless I leave the company).

Are you sure this is the case? In most cases, you cannot accelerate the payments, but you can pay it in full.