You’ve finally found the home of your dreams. There’s just one thing standing between you and your new house: The down payment.

Many home buyers today opt to use funds from their employer’s 401(K) program to come up with the down payment on a house. Ordinarily, you can’t take money from your 401(K) plan unless you retire, leave the company or become disabled, but many company plans permit certain “hardship withdrawals” when there is an immediate and heavy financial need, including the purchase of the employee’s principal residence.

The drawback to a hardship withdrawal is that you will pay taxes and penalties on the amount withdrawn from your plan, which often must be paid in the year of withdrawal. And while hardship withdrawals are allowed by law, your employer is not required to provide them in your plan. Check with your employer’s human resources department if you’re not sure if your 401(K) plan allows hardship withdrawal.

Another approach may be to borrow against your 401(K) – often as much as 50 percent of your account balance. You pay interest on the loan, but the interest goes back into your account. The money you receive is not taxable as long it is paid back and plans can give you anywhere from five to 30 years to pay back your loan.

There are risks involved in borrowing from your 401(K). If you lose your job or leave your employer, you must pay back the loan in full within a short period, sometimes as little as 60 days. If the money is not paid back in that time, it is considered a withdrawal from your plan and subjected to the same taxes and penalties. And while 401(K) accounts can usually be rolled over into a new employer’s 401(K) without penalties, loans from a 401(K) cannot be rolled over.

In addition, because the funds withdrawn from your account are no longer earning compound interest, your account will be smaller when you retire. And you’ll be replacing pretax money with after-tax money.

Some lenders will count the money you borrowed from your 401(K) as an additional debt that will go along with your car payments, student loans and credit cards. While it may seem unfair since you are borrowing your own money, most lenders view it as a payment obligation that affects your debt-to-income ratio in qualifying for a home loan. It may be a factor in whether you decide to make a hardship withdrawal from your 401(K) and pay tax penalties or borrow against it.

Only your FICO score is used by most mortgage companies to check your credit. The FICO score became the gold standard in the mortgage lending world when Fannie Mae and Freddie Mac endorsed its use for evaluating mortgage loan applications in the mid 90s.

The easiest and most convenient site to order your FICO credit scores is through Fair Isaac’s consumer website: www.myFICO.com.

This is the only site where consumers can order all three of their FICO credit scores from all three credit bureaus. You can also order scores from the credit bureau websites directly but you should be aware that you’re not necessarily going to get a score that lenders use.

Learn more by downloading the Understanding FICO Scores Guide from myFICO.

Let them know about the closing cost incentives available through Stanley Martin’s partnership with FHM, and inform them of the benefits of working with FHM over the competition:

• Expert knowledge of the intricacies of new home construction and all Stanley Martin processes
• A full range of financing options, competitive rates, and expert mortgage counseling
• Local loan experts who are familiar with the community and truly care about their relationships with clients
• Ongoing, transparent communication throughout the mortgage process
• Real-time milestone notifications every step of the way
• Generous builder-paid incentives applied toward closing costs

• Medical, Dental, and Vision Coverage
• Generous Paid Time Off (PTO) Allowance
• Short-Term and Long-Term Disability
• Fully Funded Basic Life Insurance / AD&D
• Elective Additional Life Insurance Coverage
• 401(k) Plan with Company Matching Options
• Deferred Compensation Plan

Yes. The amount a buyer is pre-approved to borrow is not a guarantee. It’s based on information provided during the pre-approval process. There are many reasons an application could be denied even after pre-approval. For example, the buyer’s financial situation could change before they close on the home, or the lender’s mortgage guidelines could change after pre-approval.