401k Withdrawal for a house?

It's not a hardship withdrawl if it's for first time home buyers. FT Home buyer is only subject to the applicable income taxes, NO 10% PENALTY!

Is it smart... it depends. If there is no other way to get the cash and it's a deal breaker... well... I'm not a big fan of pulling funds from a 401K.

I also think that housing prices will continue to fall as there is a lot of inventory waiting in the wings that hasn't been released. If the fed regulators actually did their jobs and demand banks get the non-performing assets (houses) off the books, the prices would fall quick.

I'm currently in a situation where I pay about the same in rent as it would cost to buy a place, but, I'm standing pat. It's all about timing and getting something you like.

The 8k credit is currently keeping prices inflated a bit... See if they will use that as your down payment.