Excerpt: While a 401(k) loan can indeed help provide the down payment on a home, keep in mind that lenders typically treat the money as a form of debt. That could have an impact on your qualifying debt-to-income ratio for the size of the home loan for which you can qualify. The flip side is that using 401(k) money for a down payment could provide the needed equity to avoid paying mortgage insurance. Retirement-fund loans have to be repaid within five years. But there is no set time frame for paying back the loans if they are used to make a down payment on a primary home.  MORE >>