TSP Loans & Eligibility

What They Are and How to Get Them

A TSP loan is a when you borrow money from your Thrift Savings Plan account while still employed with the Federal Government or the U.S. uniformed services. Prior to engaging in a TSP loan, you should consider its affect on your retirement income's potential.

By taking out a TSP Loan, you have borrowed from your TSP account. The amount of the TSP Loan cannot exceed the amount of your contributions, plus the earnings gained from said contributions. If your TSP is through the Federal Employees' Retirement System (FERS), you can't borrow from any contributions to your TSP account made by the agency or earnings from those contributions.

Just like any other loan, A TSP Loan from your TSP account must be repaid with interest. This amount, repayments and interest, is then added once again to your TSP account.

There are two types of TSP Loans:

General Purpose

  • May be used for any purpose
  • Requires no documentation
  • Has a repayment term of 1 to 5 years

Residential

  • May only be used for the purchase or construction of a primary residence
  • Requires documentation
  • Has a repayment term of 1 to 15 years

Eligibility for the two is slightly different, however max and minimum amounts are the same: $1,000 to your own contributions and earnings on those contributions in the account from intending to borrow, not including any outstanding loan balance; or 50% of your vested account balance (including any outstanding loan balance) or $10,000, whichever is greater, minus any outstanding loan balance; or $50,000 minus your highest outstanding loan balance, if any, during the last 12 months. Even if the loan is currently paid in full, it will still be considered in the calculation when it is open at any time during the last 12 months.

The General TSP Loan requires that the applicant be employed by the federal government, must be in "pay status" (as repayments are payroll deductions), has only one TSP loan outstanding in either category for an single TSP account, and has at least $1,000 in the applicant's own contributions/earnings (agency contributions and earnings don't count). The eligibility will not allow for court orders against the TSP account, taxable distribution of a loan in the last 12 months, or the repayment of a TSP loan of the same type in the last 60 days.

A Residential TSP Loan requires the same qualifications as the above general loan, but also requires certain things from its use. A residential loan cannot be used for renovations to an existing residence, purchasing of land only, buying out another person's share in the borrower's current residence, refinancing or prepaying an existing mortgage, or the construction of an addition to an existing residence.

Visit TSPaccounts.com for more information on TSP Loan costs.