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Borrow From a 401 (k) for a House: Getting a 401 (k) Loan. In terms of repayment, a 401(k) loan must be repaid within five years. Your payments must be made at least quarterly, and include both principal and interest. One important caveat to note: loan payments are not treated as contributions to your plan.

Buying a new home often requires a hefty down payment and finding the cash can be tricky. To make the numbers work, some homebuyers turn to the money in their 401(k).

Buying a house without a lot of cash. Just because you can borrow from your 401(k) to purchase a home doesn’t mean you should. Here’s why:. The pitfalls of using 401(k) money to buy a home.

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