A Thrift Savings Plan loan lets you borrow from your own TSP balance and pay yourself back, with interest, through payroll deductions. It can be a cheaper option than a credit card or personal loan, but it also has real downsides. Here's how TSP loans work and what to weigh before you take one.
| Type | Use | Repayment term |
|---|---|---|
| General purpose | Any reason; no documentation required | 1 to 5 years |
| Residential | Buying or building your primary home; documentation required | Up to 15 years |
You can have one general purpose and one residential loan outstanding at the same time, per account (civilian and uniformed-services accounts are separate).
Only the money you contributed (and its earnings) is available to borrow — not the agency/matching portion.
The interest rate on a TSP loan is the G Fund rate at the time your application is processed, and it's fixed for the life of the loan. The key difference from a bank loan: the interest you pay goes back into your own TSP account, not to a lender. There is also a small one-time processing fee.
While your money is out on loan, it is not invested in the markets. If the C, S, or I funds rise during that time, you miss those gains — and you're effectively earning only the G Fund rate on the borrowed amount. Over a multi-year loan, that lost growth can dwarf the interest you "save" versus another lender.
Before borrowing, it's worth seeing what that money could become if you left it invested. Try different scenarios in the TSP calculator.
| General purpose | Residential | |
|---|---|---|
| Use | Any purpose | Buying or building a primary residence |
| Repayment term | 1–5 years | 1–15 years |
| Documentation | None required | Proof of purchase required |
You can have one of each type outstanding at a time. A residential loan can't be used to refinance, or for a rental or second home — only a primary residence you'll live in.
Repayments come out of your pay automatically each pay period and go straight back into your TSP. You can make extra payments or pay the loan off early with no penalty, and re-amortize if your pay changes. Miss too many payments and the loan can be declared a taxable distribution — see the risk above.
Say you borrow $20,000 on a 5-year general purpose loan. You repay yourself with interest at the G Fund rate — but while that $20,000 sits outside the market, it isn't earning C/S/I fund returns. If those funds average 8% over those five years, the growth you gave up on $20,000 is roughly $9,400 — far more than the modest interest you "saved" versus a bank. That gap is the true cost of a TSP loan.
Open the TSP calculator →No. A TSP loan is borrowed from your own account, so it isn't reported to credit bureaus, doesn't affect your credit score, and requires no credit check.
Yes, as long as you keep contributing at least 5% of basic pay each pay period. Loan repayments are separate from contributions — don't stop contributing to repay the loan, or you'll forfeit match.
You repay the remaining balance in full, or the unpaid amount is treated as a taxable distribution — plus a possible 10% penalty if you're under 59½. Plan repayment around your expected time in service.
Once your application is processed, funds are typically disbursed within a few business days. Direct deposit is faster than a mailed check.