The exception to the 10% penalty for early withdrawal does not require any reason other than that you suffered a COVID-related financial hardship. But that exception only applies to withdrawals made before December 31, 2020 and was not extended to 2021 by Congress.
401(k) funds are not eligible for the "first time homebuyer" exception to the 10% early withdrawal penalty, that only applies to IRAs. IRAs and 401(k)s are controlled by different laws and regulations even though they have some similarities.
The withdrawal is always subject to regular income tax. You will also pay the 10% early withdrawal penalty unless the withdrawal was made before December 31, 2020 and you suffered a COVID-related financial hardship.
