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A Thrift Savings Plan (TSP) loan is a financial option available to federal employees and military members who participate in the TSP, a government-sponsored retirement savings program. This loan allows participants to borrow from their own TSP account balance without incurring early withdrawal penalties. Read on to find out more about TSP loans and how they work, including what you can use a TSP loan for, eligibility requirements, how long it takes to get a TSP loan, and more.
What Is a Thrift Savings Plan?
A Thrift Savings Plan (TSP) is a type of retirement plan for federal employees and uniformed service members. It’s similar to a 401(k), where individuals contribute funds into the account throughout their working life. When they retire, they may use those funds, plus interest and earnings, to live on.Often, contributions are automatic so that a portion of a person’s paycheck goes directly into their TSP. These contributions may be tax-deferred.
How Does a Thrift Savings Plan (TSP) Loan Work?
A TSP loan is money you borrow from your Thrift Savings Plan. The minimum amount you can borrow with a TSP loan is $1,000. The maximum amount you can borrow is the smallest of these:
Your contributions and earnings
50% of your total balance or $10,000, whichever is greater
$50,000 minus your highest outstanding TSP loan balance, if any, over the past 12 months
You can use a general purpose TSP loan for almost anything. It has a repayment term of 12 to 60 months, and there is a $50 processing fee.A primary residence TSP loan must be used for the purchase or construction of a primary home. Borrowers must provide supporting documentation. This loan has a repayment term of 61 to 180 months and there is a $100 processing fee.You will pay interest on a TSP loan, but because it’s your own money that you’re borrowing, the interest you pay goes back to your account.
How Long Does It Take To Get a Thrift Savings Plan (TSP) Loan?
TSP loans typically take 7 to 10 business days to process after your loan request is approved. The timeline can vary depending on how you submit your application and whether your account information is up-to-date. Choosing direct deposit may help expedite receiving the loan funds.
Getting a Thrift Savings Plan (TSP) Loan
To get a Thrift Savings Plan loan, review the requirements and options on the TSP website. Determine how much money you want to borrow, and make sure it fits the criteria outlined above. Then, log into your TSP account and fill out the loan application. You may be able to submit your application online, or you might have to print it out and mail or fax it.
Thrift Savings Plan (TSP) Loan Eligibility Requirements
Both types of TSP loans have certain eligibility requirements. For both, you must have at least $1,000 of your own contributions and related earnings available, and you need to be employed as a federal employee or be a member of the uniformed services. In addition, you must not have repaid a similar TSP loan in the last 30 days.For a primary residence TSP loan, you may use the loan to buy or build one of the following:
House
Townhome
Condominium
Shares in a cooperative housing corporation
Mobile home
You can’t use a primary residence loan to refinance or prepay an existing mortgage, renovate your existing home, buy another person’s share in your existing home, or buy land.
Should You Get a Thrift Savings Plan (TSP) Loan?
If you have a qualifying TSP and need to borrow money, a TSP loan could be beneficial. Generally, TSP loans have lower interest rates than other financing options (as of February 2025, that rate was 4.625%). Just keep in mind that any money you borrow from your Thrift Savings Plan is money you’re taking away from your retirement. It won’t continue to earn dividends and interest like it would if it remained in your TSP account. And even though the interest you pay on the loan will go into your account, that interest will typically be less than you would have earned if the money had remained in your TSP account. It’s important that you pay back the loan promptly so you don’t jeopardize your retirement funds. You may even want to pay off a TSP loan early.Recommended: Need to Borrow Money? 9 Ways to Consider
Thrift Savings Plan (TSP) Loan Alternatives
If you decide that a TSP loan isn’t the right option for you, there are alternatives to get the money you need, including:
Credit Card
While credit cards often have high interest rates, you may be able to get one with an introductory 0% APR (annual percentage rate) for the first year. That way you can use the credit card to pay for whatever expense you have, and as long as you can pay off the full amount before the introductory period ends, you won’t owe interest. Recommended: How to Find the Right Credit Card
Cash
You could also use cash instead of a TSP loan to cover your expenses. However, you may have to wait until you save up enough funds, which could take some time. Plus, you don’t want to drain your entire savings account — you should keep enough money in reserve to cover any emergencies that come up.
Personal Loan
A personal loan is where a bank, online lender, or credit union lends you a lump sum that you repay with interest in installments over time. The higher your credit score, the lower the interest rate you may receive.There are many benefits of a personal loan, including getting access to funds quickly — generally within one to five days. But be sure to weigh the pros and cons of personal loans before applying to make sure it’s the right option for you.
The Takeaway
You can borrow from your Thrift Savings Plan with a Thrift Savings Plan loan, but consider carefully whether this is the best option for you. Taking money out of your retirement fund may cost you in earnings and interest. There are other alternatives for borrowing money, like taking out a personal loan, that you may want to think about instead.If you’re exploring the idea of a personal loan, Lantern by SoFi can help. By filling out one simple form, you can compare personal loan rates and terms from multiple lenders at once to conveniently find the best fit for your needs.Check your rate today with Lantern!
Frequently Asked Questions
What are TSP loans?
Is a TSP loan a bad idea?
Do TSP loans show on a credit report?
Photo credit: iStock/DjordjeDjurdjevic
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About the Author
Susan Guillory
Su Guillory is a freelance business writer and expat coach. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards.
