I'm thinking you're talking about taking out a 15-year loan on the 401k for a home purchase, in which case I don't believe it's penalized or taxed. Because you're borrowing the money with the 401k as collateral, as opposed to taking the money out. I took a loan from mine for part of an apartment purchase price, but I'm just paying it back over 4 years, not doing the special home-buying deal so I know less about that. Part of the rules are dictated by regulations (for example you can only borrow 50% of the value) but some stuff depends on the company that administers your plan. For example whether the loan amount is kept in your regular investments or placed in super conservative ones where you would miss out on market rises (or avoid market losses) in the meantime. And what the loan origination and maintenance fees are. And your options if you want to change the payment plan in the future. I think it is standard that if you leave your job you need to pay the full amount back within 60 days or it is penalized like a withdrawal, in which case maybe there is some special consideration if it was for a home purchase, I don't know, probably pretty easy to google. How long would it take you to save up the amount you need if you didn't use the 401k? Do you have other ways to get a line of credit if the rental property needs immediate repairs or you have some other emergency?