No, this does not qualify as a hardship according to the IRS.
A withdrawal from a 401K retirement account is not eligible for the first time home buyer early withdrawal penalty exclusion.
Only withdrawals from an IRA are eligible and then only on the first $10,000 would the 10% early withdrawal penalty be excluded. The distribution is still added to your return as ordinary income and taxed at your current tax rate for your filing status.
See this IRS Topic 558 - Additional Tax on Early Distributions from Retirement Plans Other Than IRAs for additional information: http://www.irs.gov/taxtopics/tc558.html
