401k and debt

[Ryan Keenan]

hello bp, I have two rental properties financed both with VA loans. Looking to use FHA on the 3rd one in the near future. However, I do have about 20k in debt for a home improvement loan. I was wondering if I borrowed from my 401k and paid off this debt would the bank see this as not having any debt now since it wouldn't be reported to creditors? Could i now have a better chance in being approved for a new home loan?Are there any problems I may run into by doing this? Thanks!

Ryan.

[Bryan O.]

If this is a W-2 job 401k, your pay stubs will show the repayment, which lowers your income. You would basically be swapping one debt for another, but as @Lynn McGeein said, likely losing a good source of reserve requirement documentation.