The case for using your 401(k)
Withdrawing money from a 401k
Other alternatives to using a 401(k)
It is totally admissible and legal for a family member such as parents or other relatives to give you the money for the purchase of a home. This is what is called a gift and it does not count against your debt to income ratio.
Sell items to raise funds
Maximize IRA contributions
If you have an IRA account, it is possible to withdraw up to $10,000 without being subject to the early withdrawal penalty. This is assuming that you have not reached age 59½ yet and this can be a great way to get funds for buying a home. However, that $10,000 is still subject to state and federal income taxes. If your withdrawal exceeds $10,000, then the 10% penalty is applied to the additional distribution.