If you are allowed to make the 401k withdrawal for a first time home purchase, then do you have to pay income tax on that amount?

I do believe that would be a taxable event

Yes and no.. If you "Borrow" against your 401K, then the money you receive is not subject to taxation.. however, if you actually withdraw the funds, then not only will you have to pay tax, but you will also have to pay an additional 10% penalty come tax time.. The 401K administrator will issue you a 1099-R at years end.. and send a copy to the IRS.. so there's no way to avoid this.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347