If you're a federal employee, either military or civilian, and in need of a loan, borrowing from your Thrift Saving Plan (TSP) account is worth looking into. The loan processing fee is modest, the interest you pay goes directly into your account, and the payments are made through payroll deduction.
CHECK YOUR TSP BALANCE When you get a TSP loan, you are borrowing against your own contributions and whatever earning's they've accumulated. (You cannot borrow against your agency contributions.) In general, you can borrow any amount between $1,000 to $50,000, with the cap set at the amount of your contributions and earnings. To check how much of your balance is available to borrow, go to the Account Access section of your online TSP account (see the link in the Resource section below).
Verify the requirements. Most currently working federal employee will be eligible for TSP loans. You'll need to have contributed at least $1,000 (including earnings on your contribution), be currently working as either a federal civilian employee or a military member, and on active pay status. (Separated, retired, LWOP, or furloughed participants are not eligible.) If you've previously had a TSP loan, you'll have to wait 60 days after repayment to apply for a new loan.
Customize your loan. By choosing your loan type, amount, and repayment period, you can tailor your loan to suit your financial needs. There are two types of TSP loans available -- "general purpose" and "residential." The general purpose loan, as the name implies, can be used for whatever you want. The repayment period is one to five years and you do not need to provide documentation. The residential loan, on the other hand, allow for a longer repayment period -- up to 15 years -- but can only be used to buy or build your primary residence. You cannot use a residential TSP load to refinance your existing mortgage, renovate your home, or purchase land.
The interest you'll pay over the entire life of the loan is the G Fund rate at the time you submit your application for processing.
Apply online or via mail. Once you've decided on a loan type and amount, applying is a snap. The best starting point is the TSP website (see the References section). You'll need your Social Security number and your TSP PIN. Look for the loan application in the Account Access. If you're single and applying for a general purpose loan, you should be able to complete and submit the application electronically. If you're married or applying for a residential loan, you'll have to print out the partially completed loan agreement, complete the rest by hand, and mail it to the TSP. You can also complete the entire process by mail if you're not comfortable with electronic submission. Once you're loan is approved you can have the funds electronically transferred to your bank account or you can request a paper check and sent to the address on record.
There is a small loan processing fee that will be automatically deducted from your TSP account. If you're able to complete the entire loan process electronically, you'll receive your funds within about two weeks. For paper applications, it will generally take three to four weeks to receive the funds. Married TSP participants will need spousal approval of the loan.
You cannot get a TSP loan if there is a court order against your account, such as enforced payment of child support or alimony.