Yes and No.
Yes, it lowers the amount of disposable income left over available for your spending pleasure. Keep in mind, though, you aren't necessarily locked in to contributing. Just mentioning that, although you should never stop contributing.
No it doesn't lower your income, in the reportable sense, like for taxes. This is the figure the bank will be interested in. They will also want to know what your other liabilities are, as this affects your ability to pay. And no, a 401(k) contribution is not considered a liability.
Will contributing to 401k lower income when applying for a loan?
no...because the lender can see what you earn and understand that if things get tight you can always lower your 401k contribution if need be. i was in the same boat because almost ne half of my salary is taken out for pre tax stuff and i was worried. but all was ok
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