Yes, and for many first-time buyers it's one of the better sources of down-payment money, as long as you borrow instead of cashing out. A withdrawal before retirement age generally triggers ordinary income tax plus an early-withdrawal penalty under IRS rules, and because the distribution stacks on top of your regular income, pulling $20,000 can be taxed as if you earned well over your normal salary that year. A 401(k) loan avoids all of that. Under IRS limits you can typically borrow up to the lesser of $50,000 or 50% of your vested balance (confirm your plan's specifics), and you pay it back to yourself with interest. The combination works well when you have retirement savings but limited liquid cash: pair the loan with a low-down-payment program (3% down on conventional, 3.5% on FHA) and it covers the down payment while leaving reserves after closing. The pitfalls: - Borrow only what you need. - Ask your plan administrator what happens if you change jobs. Some plans require the balance be repaid quickly when you leave. Repayment terms often run around five years, and by then you've usually built equity and rebuilt the balance.