401k withdrawl for a house

I'm a bit of a dunce on the whole topic of personal finance, but hoping that later this year when the real estate market cools off a bit more that I can finally start shopping for a house. Is it true that you can withdrawl from your 401k for a house, or...

a down payment?

My husband wants to do the same thing and he don't know how without paying a ton of taxes and penalties.

AFAIK early widthdrawls from 401(k) result in having to pay tax on the income (since it was defered) and unless the distribution was part of a court order a 10% penalty. In my 401(k) info there is no mention of any loophole for home purchases.

You can borrow against your 401(k) for a downpayment; perhaps this is what you heard about. If your 401(k) allows loans you can do this without taxes or penalties but you will have to pay the money back into your 401(k) with interest.

Most financial advisors recommend against 401(k) loans though I'd argue that the tax savings of owning vs. renting are great enough to make it something to think about.