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[quote=Anonymous]What's your expected income growth relative to the cost of owning the house?  I think this is what answers the question.  Many people buy first homes using 80-10-10's, and same with a 401k loan.  That's because it makes more sense to buy the house now and pay off the "small" loan quickly than to rent longer or do two buy/sell house transactions (which, by the way, could cost you in closing costs more than a $50k 401k loan + 20% gains you might experience if you left it in the stock market for a year).  But this only makes sense if over a few years you pay off your "mini" loan quickly with your increased earnings.  But if your family income is flat (or decreasing once you have a family), all you're really doing is buying more house than you can afford now by saying that later you plan on buying more house than you can afford...

Also, you should look into these "less than 20% down no PMI" loans --- we have had several mortgage brokers mention them to us now and I know a couple of banks are advertising them on the radio.  In the case of one mortgage broker, he said if you could show 18 months payments available in the bank (even if that was in your 401k balance), they offered competitive rates with 15% down instead of 20%.  I didn't pursue it because we don't need it, but you should ask what other options there are...  javascript:void(0);[/quote]

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