Can I really borrow from my 401(k) to use as a down payment?

Yes—most employer 401(k) plans allow you to borrow the lesser of 50% of your vested balance or $50,000. The funds can be used for your down payment and/or closing costs, and as long as you follow the plan’s repayment rules, it’s treated as a loan, not a taxable withdrawal.

How much are closing costs when buying a home?

In many markets, including Arlington, closing costs typically run about 2.5%–3.0% of the purchase price. On a $500,000 condo, that’s roughly $12,500–$15,000 in addition to your down payment.

Can the seller really pay my closing costs?

Yes. Depending on your loan type, the seller may be able to credit between 3%–6% of the purchase price toward your closing costs. This is negotiated in your offer and can significantly reduce the cash needed to close.

Do I need 20% down to buy a home?

No. Many first-time buyers use 3% down conventional loans or 3.5% down FHA loans. While 20% down eliminates mortgage insurance, it's not required—and waiting to save that much can delay homeownership by years.

How do lenders view a 401(k) loan for a down payment?

Most lenders view a 401(k) loan as an acceptable source of funds. It usually isn’t counted as a monthly debt in your debt-to-income ratio, but you’ll need to document the loan terms and provide a paper trail for the funds.

Is tapping my retirement account for a down payment a bad idea?

It depends. Buying sooner helps you build equity instead of paying rising rent, but it temporarily reduces your retirement growth and carries the risk that comes with a 401(k) loan. It's important to evaluate your full financial picture.

What if my credit score isn’t perfect?

If your credit is bruised, you may still qualify. FHA loans are flexible on credit scores and require only 3.5% down. A lender can determine which programs are available based on your credit profile.