That does sound like a bad place to build a house.

Anyhoo. Here's the particulars I learned about borrowing from my 401k, just in case you're bored enough to want to read this.

This is called a "General Purpose" loan and I can take one out for anything, anytime I want to.
I can borrow up to %50 of the total value of the account.
I can have up to 2 loans at the same time.
I can initiate the loan either through their web site, or phone system.
I have to pay a $75 loan origination fee and it comes out of the money that I borrowed. (If I borrow $3100, I get a check for $3025).
I can pay up to %50 of the loan early, or I can pay it all off at once. (So if I borrow $3100, I can only pay up to $1550 early, or I can pay the entire loan amount anytime I want)
When it's time for me to pay the entire loan amount off early, I call them and then they tell me how much and where to send the check.
The amount of interest that I pay myself for this loan is 4.25%.