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

[Anonymous]

Would rather use my own funds than borrowing from inlaws/parents. All I'm looking to borrow was 10-30% payable back in 2 years. I know most are against but I either take the loan for a house I need now vs extending lease and wasting more on rent....

[Anonymous]

You can't afford to buy and you're stretching. Borrowing from your parents? They can't or don't want to gift you the funds. Tighten your budget and save up for a year and buy.

[Anonymous]

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.

[Anonymous]

We used a 401k loan but we knew we could pay it back in about two or three months.

[Anonymous]

for those who put a down payment... how many monthly mortgage payments could you pay using cash reserves?

6 months, 1 year?

[Anonymous]

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.

+1 we took 35k out and pay it back over 5 years. Has been working great for us.

[Anonymous]

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

[Anonymous]

You cannot afford whatever you are looking at. Don't do it.

[Anonymous]

Anonymous wrote:You cannot afford whatever you are looking at. Don't do it.

You don't know this. We didn't do it, but my wife and I looked at taking out 50K each from our 401Ks (100K total) instead of getting a bridge loan when we were buying our new house and we weren't sure that our currently house would close in time. We had plenty of income to cover both mortgages but we needed some of the equity in our existing house for the down payment on the new house. Our plan was to pull out the 100K from our 401ks, and then replace it 1 month later after we sold our current house. There are many reasons to do a 401K loan, they don't all mean that you can't afford your new house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You cannot afford whatever you are looking at. Don't do it.

You don't know this. We didn't do it, but my wife and I looked at taking out 50K each from our 401Ks (100K total) instead of getting a bridge loan when we were buying our new house and we weren't sure that our currently house would close in time. We had plenty of income to cover both mortgages but we needed some of the equity in our existing house for the down payment on the new house. Our plan was to pull out the 100K from our 401ks, and then replace it 1 month later after we sold our current house. There are many reasons to do a 401K loan, they don't all mean that you can't afford your new house.

Thanks for being the voice of reason. Too often people on this board deal in absolutes. I can see where if you use the 401k money to lower your loan amount AND get a better interest rate, eliminate PMI ...it could be a pretty good deal in the long run, especially if pay the back the 401k loan back fairly quickly.

[Anonymous]

Anonymous wrote:You can't afford to buy and you're stretching. Borrowing from your parents? They can't or don't want to gift you the funds. Tighten your budget and save up for a year and buy.

Thanks, Mitt.

[Anonymous]

OP, what's your plan if you lose your job and it has to be paid back within 60 days? It's basically a loan with a very short call note on it.

Would you take the penalty hit? Would you borrow from your parents then? Do you have the money elsewhere but don't want to liquidate it?

[Anonymous]

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.

[Anonymous]

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!!

[Anonymous]

Following this thread closely. We're selling in shaw and buying in AU park and the financial ninja moves are crazy to come up with cash to bridge about a 20 day period between buying and selling and closing. We're borrowing from our 401ks to do it but it's stressful and admittedly I can't totally get my arms around if there are long term losses on this method. But we just don't have 200k cash so I'm not sure what others do in a hot market if they don't have piles of cash on hand.