Does 401(k) Proceeds Count Towards Monthly Income

Does 401(k) Proceeds Count Towards Monthly Income

Yes, a 401(k) can be used for a down payment and count as income for a home loan. The 401(k) will either be calculated based on the lump sum amount and then divided by 24. The lender calculates what a lump sum figure would be when dividing it over 2 years. If the payments are already a monthly dividend, the lender will use this figure as-is typically.

Before using a 401(k) as a down payment, securing more equity in the home, check with the lender on the exact amount needed. Otherwise one may need to pull more out and this can delay closing or cost more money to perform this action.

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