I was a minister & now a teacher. I had a 403-B while I was a minister & was told by Fidelity that I could take it out penalty-free for a house allowance. Is that true?

I am not retired. I am 40 years old.

Any withdrawals now will be taxed as ordinary income plus a 10% penalty for early withdrawal.  Clergy can have part of their salary designated as a tax-free housing allowance, and retired clergy can have their pension designated as a tax-free housing allowance, but if your current job is teacher, you aren't eligible for any of the special clergy tax rules, even if you are ordained.  What counts is your current job duties and function.

If you are a retired pastor, and your denomination designates your 403(b) withdrawals as a housing allowance (in advance and in writing) you can take it as a tax-free housing allowance.  The 403(b) must be sponsored by the denomination or church.  If you roll it over into a private IRA or a retirement account belonging to a different employer, you lose that benefit even if you are a retired pastor.

http://www.ecfa.org/PDF/2017-Ministers'-Taxes-Made-Easy.pdf