Loan types and terms
Before taking out a loan, you should carefully consider its potential effect on your retirement income.
The current loan interest rate on new loans is --%, which is the current G Fund interest rate.
How a TSP loan works
When you take a loan, you borrow from your contributions to your TSP account. Your loan amount can’t exceed the amount of your own contributions and earnings from those contributions. Also, you cannot borrow from contributions or earnings you get from your agency or service.
If you meet the loan eligibility rules and your loan request is approved, the loan amount is removed from your TSP account. You must repay your loan with interest. Generally, loans are repaid through payroll deductions. Your repayments restore the amount of your loan, plus interest, to your account. For additional information, visit Repaying your loan.
Loan types and terms
We allow two types of loans:
| General Purpose | Residential |
|---|---|
May be used for any purpose |
May only be used for the purchase or construction of a primary residence |
|
Requires no documentation |
Requires documentation |
|
Has a repayment term of 1 to 5 years |
Has a repayment term of 1 to 15 years |
For details, visit Residential Loan Documentation.
- Your loan payments must start within 60 days of your loan being sent.
Loan eligibility
To be eligible for a loan, you:
- must be an active federal employee or a member of the uniformed services.
- must be in pay status because repayments are set up as payroll deductions.
- can only have one outstanding general purpose loan and one outstanding residential loan from any one TSP account at a time.
- must have at least $1,000 of your own contributions and earnings in your account (agency/service contributions and earnings cannot be borrowed).
- must not have repaid a loan of the same type in full within the past 60 days. (If you have both a civilian account and a uniformed services account, the 60-day waiting period applies separately to each account.)
- must not have had a taxable distribution of a loan within the past 12 months unless it was due to your leaving federal service.
- must not have a court order against your account.
Residential loan eligibility rules
Residential loans have specific rules in addition to the general eligibility rules:
You can only use a residential loan for purchasing or constructing a primary residence, which may include any of the following:
- House
- Townhouse
- Condominium
- Shares in a cooperative housing corporation
- Boat
- Mobile home
- Recreational vehicle
You cannot use a residential loan for
- refinancing or prepaying your existing mortgage
- construction of an addition to your existing residence
- renovations to your existing residence
- buying out another person’s share in the your current residence
- purchasing land only
- Your primary residence must be purchased in whole or in part by you, or your spouse.
Borrowing limits
Minimum loan amount
The minimum amount you can borrow is $1,000.
Maximum loan amount
The maximum amount you can borrow is the smallest of the following:
- Your own contributions and earnings on those contributions in the TSP account you'd like to borrow from, not including any outstanding loan balance;
- 50% of your vested account balance (including any outstanding loan balance) or $10,000, whichever is greater, minus any outstanding loan balance (see note below); or
- $50,000 minus your highest outstanding loan balance, if any, during the last 12 months (see note below).
Note: If you have both a civilian account and a uniformed services account, the combined account balances and outstanding loan amounts will be used to calculate the maximum loan amount.
TSP account balances are recalculated at the end of each business day based on daily share prices. As a result, the maximum loan amount may change on a daily basis.
To find out more about the maximum amount available for a loan, use the calculator, Estimate Loan Payments , or contact us.
Loan costs
Direct costs
Loan Fee We charge a loan fee of $50 for administrative expenses. This fee is deducted from your loan proceeds. For example, if you request a loan for $1,000, the amount paid to you will be $950.
Interest The interest rate on your loan is the G Fund rate at the time your loan application is processed. This rate is fixed for the life of the loan. Although loan interest is not tax-deductible, all of the interest goes back into your TSP account.
Indirect costs
When you take a loan, you sacrifice the earnings that might have accrued on the borrowed money, had it remained in your TSP account.
Although you pay the loan amount back to your account with interest, the amount of interest paid may be less than what you might have earned if the money had remained in your TSP account. For information on all costs associated with a loan, review the booklet, Loans.