Mobile Home Rent Credit Program using 401 k for down payment

I though it would be good to check if anyone has run into this.  Someone is wanting to use funds from their 401k to use as a downpayment for the purchase of a home using the mobile home rent credit program.  I know with the MHRCP, its to avoid writing mortgages so how do you incorporate a “down payment” .The 401k company will need something a specific way to but I need to know our side is done  without originating a mortgage since the whole MHRPC is non security based and here is creating immediate security…Thanks in advance. 

i would suggest they cash out the money from their 401K required for the down payment. it will cost them to do this but this is a simple way to address the down payment challenge

How about telling them if they build up enough rent credits they can use the 401K funds to purchase buy the home.

I was thinking along the lines of what Randy said.  Thanks for your input