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[quote=Anonymous][quote=Anonymous]"Silly" one back (or "moronic" one, according to one distinguised PP).  I think some PPs have confused me with OP.  (Sorry for the unwilling hickjack, OP).  Some clarifications:
1) Our HHI is over $300 -- about $320K.  We are not aiming for a $1M home, like PPs thought.  Instead, we are aiming for a $850K home (definitely not our dream home -- we will be happy with old bathrooms and kichen--, but in the location that works best for us without making our commute to work/school a nightmare).
2) A mortgage on a $850K is about $680K (80%).  So my first question is: why are PPs stating so forcefully that a HH with $320K HHI cannot afford a $680K mortgage, with no other debt (no car debt, no student debt, nothing)?
3) Besides a 401K, my spouse and I have very generous pensions and stable, solid, and good jobs.
4) I DO have savings to easily cover the 20% downpayment of about $170K.  The only issue is that part of that savings come from an illiquid asset:  about $120K will come from a 401K.  It wil NOT be a loan that has to be paid back, thus worsening my monthly cash flow.  It would be a withdrawal.  I know, I know: it will decrease my nest egg.  But my 401K will still have about $80K left after the withdrawal, and I am in my 30s, so I expect that it will continue to grow.  Plus, as I said in "3)" we have very generous pensions, diability benefits, and the like.  (I was not able to save more in other forms due to a long, sad story, so no need to be judgemental about that).
5) Planning to send kids to a German language school (about $13K a year, i.e. much much cheaper than other privates) and big part of cost will be subsidized by employer, so no much of an extra expense.  This school is high priority for us because of language -- cannot just say "PPs are right! I can just send the kids to blah blah public school in cheaper neighborhood).  It is VERY important for us that kids speak German -- much more than having to retire a few years later.

I am obviously aware that it is not ideal to use a 401K for a home downpayment, but that is the situation, and I don't expect to be a poor elderly person for doing so.    So, why is this "moronic"?[/quote]

I don't know the answer to this, but I thought the tax consequences for taking money out of your 401K were pretty horrible (e.g., you have to pay taxes on that amount as income b/c you weren't taxed on it in the first place).  Perhaps there is an exception for taking money out of your 401K for purposes of a house down payment, but I know people who have taken money out of their 401K and got completely hammered at tax time.[/quote]

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