I am considering using a small amount of my retirement account toward the purchase of our new home - what are the penalties/ramifications of doing this?

Don't do it! First you will pay a 10% penalty. In addition, what you withdraw will be added to your taxable income for the year.

Check to see if your 401K has a loan provision. If so take out a loan for the amount you need. A 401K loan is paid back top yourself including the interest.