First time homebuying classifies for the non pentalty right? How do they tax, before you receive it or add it to your yearly income come tax time.

It is not true. It IS true with an IRA but not with 401k. Check with your employer about borrowing from it.

As Rick says, its not true. Homebuying does NOT qualify as a hardship withdrawal for 401(ks). Taking a loan against your 401(k) is a MUCH better option.