Using 401k for Down Payment/Gift From Family Member

Hello MortgageMaster,

This is actually my second question; can you pull your down payment from a 401k, and does it have to be a "family" member giving to you as a "GIFT" for your down payment.

You need to check with your 401k Administrator to see if they will allow you to use proceeds from your 401k for your down payment. Some will allow you to do so and some will not.

Regarding the gift source: It depends. If the down payment is over 30-35% of the purchase price, the lender may not care: they are in a safe "Loan-To-Value" position. In most cases, however, the lender will want the gift funds to come from a family member.

MortgageMaster