≈ $0 down
Estimated total
$322/mo
Since a 401(k) loan is technically financed - just against your own retirement balance instead of a bank - your estimate turns the loan amount, interest rate, and term you enter into a monthly payment, then weighs that payment against your income to gauge how risky it would be for your day-to-day budget.
These key factors affect 401(k) loan affordability
How 401(k) loan repayment actually works
Most plans cap loans at 50% of your vested balance up to $50,000, and you generally have up to five years to repay through automatic payroll deductions at a fixed interest rate - often prime plus one or two points. Unlike a bank loan, the interest you pay goes back into your own account, but it's still money that would otherwise be growing untouched.
What happens if you leave your job
If you're laid off, quit, or change jobs while a balance is outstanding, the loan typically becomes due much sooner - often by the tax filing deadline for that year. If you can't repay it in time, the remaining balance is treated as a taxable distribution and, if you're under 59 1/2, hit with a 10% early withdrawal penalty on top of ordinary income tax.
The cost of lost market growth
While the loan is outstanding, that money is out of the market and isn't compounding, so if your investments would have returned more than the loan's interest rate, you come out behind even though you're paying yourself back. You're also repaying the loan with after-tax dollars that get taxed again when you eventually withdraw them in retirement.
How to use your results
- Compare the monthly payment to what you're already contributing - a large payroll deduction can force you to cut your own contributions and lose any employer match
- Think through your job stability before borrowing, since a sudden separation could turn the balance into an unexpected tax bill
- Use it only for costs you can't cover another way, since the loan is really borrowed against your own future retirement income
Ways to make a 401(k) loan more affordable
- Borrow less than the maximum allowed so a smaller balance is at risk if your job situation changes
- Choose the shortest term you can comfortably afford to limit how long the money is out of the market
- Keep contributing enough to get any employer match even while repaying the loan
- Build a separate emergency fund so you're not tempted to take a second 401(k) loan later
More career & life changes calculators
Nothing added yet - add something to see your risk.