Yes, your 401(k) plan can apply for a mortgage; however, the mortgage must be a non-recourse type of loan. In simple terms, you (as the Trustee) of the plan nor any disqualified individual can assist the plan in qualifying for the mortgage. No personal guarantees, no extension of credit (e.g., running your credit score), no co-signing, etc.
In a non-recourse loan, the 401(k) must make all payments from the plan. If the plan fails to make payments, the lending institution or individual’s only recourse is the property itself.
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