As the NACA Home Buyer’s Workbook/Qualification Workbook states:
Documentation of other assets is important if used for the MRF and/or NACA Buy-Downs. These funds must be deposited into your bank account before NACA Credit Access review and remain there through bank application and closing:
• 401K Assets (or Other Assets) – A copy of the 401K withdrawal and repayment terms if applicable.
The funds from the 401K, just like any other, must be liquid and immediately available to you to be considered eligible for use for buy down. 401k funds may also be used for MRF, and payment shock if needed. Your NACA counselor will need to work with you to determine exactly how much can be used and for what purpose.
So yes, you may use your 401k money in the NACA program. Now whether you decide to do that or not is up to you.