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My 401k plan states that I can withdraw a certain amount from my 401k for an eligible hardship withdrawal. I believe a 1st time home is an eligible hardship withdrawal.

Nope. You may withdraw $10,000 from an IRA for the downpayment on your first home, but not your 401(k). This TMF article explains the details:
http://www.fool.com/school/taxes/1999/taxes990521.htm

It may be possible for you to make a loan to yourself from your 401(k) and use the proceeds of that loan for the downpayment on a house. You must repay the loan to your 4o1(k), or it will count as a premature withdrawal. However, when you run the numbers, you'll discover this idea doesn't make economic sense.

David Jacobs

David Jacobs
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