This is true. But I still wouldn't touch it. More out of principle than anything else. A retirement account should be an absolute last resort, like if your spouse is dying of cancer or something. Buying a house isn't even a good enough reason IMO. Maybe saving the house from being foreclosed on would be a good reason, but not a down payment on one.

You may actually come out ahead using a 401K for help on a down payment right now, especially with the market bringing the suck (assuming the 401K is invested in a mutual fund) and it's a buyers market for homes. But if a 401K is viewed as some sort of disposable account for special circumstances, you'll retire very poor. There will always be some reason it's a good idea to take it out. Personally, I'd pretend that it's not even there (until you're 59 and a half). Just my 2 cents.