Questions on pulling out a 401k early

[Luis Valdez]

What would be the better option when purchasing a first home, cashing out early your 401K, using that money as a lump sump down payment and facing the tax penalties, or making a smaller down payment and facing higher interest rates long term?

[Darrell D.]

Best way to improve on losses is to supplement your income by house-hacking.  Get a duplex (at least) and rent other units.  If the government takes 10% of your 401k cash advance, remember you can make 10% year after year!  So many people get hung on the one-time fee and they don't consider the yearly returns from their investment.  

If it's your first house, make sure it's a multifamily!  It probably won't be your "forever" home so make it a good investment.