Can I Borrow From My TSP? Eligibility, Limits, and Repayment

Yes, you can borrow from your TSP while you are still working for the federal government or serving in uniform. The Thrift Savings Plan lets eligible participants take a loan of up to $50,000 against their own contributions, repay it through payroll deduction, and pay the interest back into their own account. The money comes out of your invested balance while the loan is outstanding, which is the part of the deal that costs you the most, even though it never shows up as a fee.

Who Qualifies for a TSP Loan

You can apply if you meet four conditions at the same time: you are a federal civilian employee or uniformed service member in pay status, you are eligible to contribute to the TSP, your account holds at least $1,000 in your own contributions and their earnings, and at least 30 business days have passed since you fully repaid any previous TSP loan.¹

The $1,000 floor counts only your own contributions and the earnings on them. Agency automatic (1%) contributions that haven’t vested don’t count toward the floor or toward your borrowing capacity. Most FERS employees vest in that 1% after three years of service.² Your own contributions and agency matching contributions vest immediately.

Two situations put loans off the table. You cannot borrow once you separate or retire, and you cannot borrow while in nonpay status.³ A court order on your account, such as a child support decree or a retirement benefits order, can also block or limit a loan.

The Two Loan Types

The TSP offers a general purpose loan and a residential loan. You can have up to two loans outstanding on one account at any time, but only one of those can be a residential loan.¹ If you have both a civilian and a uniformed services account, the limit applies to each account separately.

A general purpose loan asks for no explanation of what you plan to do with the money and no supporting documents. You repay it over 1 to 5 years. The processing fee is $50, taken out of the proceeds.⁴

A residential loan is narrower. It funds only the purchase or construction of a primary residence you will live in, and the repayment term runs up to 15 years. The processing fee is $100, and you have to submit a signed purchase contract or construction agreement showing the price, closing date, and signatures.⁴ You cannot use a residential loan to refinance a mortgage, pay off a home you already own, pay for renovations, or buy out a co-owner’s share of your current home.⁵

How Much You Can Borrow

Your maximum is the smallest of three figures:⁶

The portion of your account made up of your own contributions and their earnings, minus any outstanding loan principal.
Half of your vested employee contributions and earnings (including any outstanding loan balance), or $10,000, whichever is greater, minus any outstanding loan balance.
$50,000, minus the highest outstanding loan balance you carried during the 12 months before the new loan date.

That third calculation is the one that trips people. If you carried a $30,000 loan balance at any point in the past year, your new maximum is $20,000 even if you paid the earlier loan off in full.⁷ The rule exists to stop participants from paying off a loan and immediately reborrowing the full $50,000. The minimum you can borrow is $1,000.⁶

What a TSP Loan Costs

The interest rate is fixed for the life of the loan at the G Fund rate from the month before you submit the request.⁴ As a reference point, the G Fund rate in early 2026 is around 4%. The rate does not move after your loan is issued. Because you are borrowing from yourself, the interest you pay goes back into your own account, though it goes into the G Fund rather than whatever funds you had chosen.

The processing fee is $50 or $100 depending on loan type. The larger cost is one the fee schedule does not show. When your loan is disbursed, that money is pulled out of the funds you were invested in. For as long as the loan is outstanding, that balance earns the G Fund rate instead of whatever your stock-based funds return. If those funds earn 8% while your loan is repaid at 4%, you give up the difference, and you do not get it back. Longer loans and larger balances magnify the gap.

Applying and Spousal Consent

You submit the request through the My Account portal on tsp.gov. The tool walks you through loan type, amount, repayment term, and bank routing information for direct deposit, and you sign electronically. For a residential loan, you upload the purchase contract or construction agreement through the portal or mail it in. Make sure the numbers and dates you enter match the documents, because discrepancies cause delays.

Spousal involvement depends on your retirement system. If you are under FERS or in the uniformed services, your spouse must consent in writing by signing the loan agreement before the loan can be approved.⁸ If you are under CSRS, the TSP notifies your spouse that you have applied, but consent is not required. The consent rule still applies if you are separated but not divorced. You can request an exception by filing Form TSP-16 if you cannot locate your spouse or exceptional circumstances apply, but exceptions are rarely granted.⁹

Repayment Through Payroll

Repayment has to begin within 60 days of disbursement. The TSP notifies your payroll office when your loan is processed, and deductions start automatically from each paycheck.⁴ You can send extra payments at any time by personal check, cashier’s check, money order, or a one-time direct debit. Extra payments are applied to your balance twice a month.

If your pay cycle changes, tell the TSP record keeper. Your loan will be reamortized so the payment amount fits the new schedule, and the interest rate stays the same.¹⁰ Skipping that step after moving to fewer pay periods per year can leave your payments short, and a short loan can end up declared a deemed distribution.

If you enter nonpay status, the TSP automatically suspends payroll-deducted payments for up to one year. For a civilian employee called to active military duty, the suspension runs until you return to pay status with no one-year cap.³ When you return to pay status or hit the limit, you resume payments by check, money order, or direct debit.

If You Leave Federal Service Before Paying It Off

Separating with a loan outstanding gives you three choices:⁴

Keep paying by setting up monthly payments through check, money order, or recurring direct debit. Your original maximum repayment deadline still applies.
Pay the full remaining balance before the deadline.
Stop paying and let the loan foreclose, in which case the unpaid balance and accrued interest are treated as a taxable distribution.

Once a loan is foreclosed after separation, you cannot repay it to the TSP. You can, however, use personal funds to roll over the taxed amount into your TSP account, another eligible employer plan, or an IRA by the due date (including extensions) of your federal tax return for the year of the foreclosure. That rollover defers the income tax and avoids the 10% early withdrawal penalty if it would otherwise apply.¹¹

What Default Costs You

A TSP loan that is not repaid according to its terms is declared a “deemed distribution” for the full unpaid balance plus accrued interest, and the IRS treats it as if you withdrew that money.¹² This happens if you miss two or more payments and do not catch up during the cure period, if you do not pay the loan off by the end of its maximum term, or if you stay in nonpay status for more than a year without resuming payments.

The TSP reports the deemed distribution to the IRS as taxable income for that year. If you are under 59½, you will usually owe an additional 10% early withdrawal penalty on top of regular income tax.¹³ One exception: if you separated from service during or after the year you turned 55 (or 50 for public safety employees), the 10% penalty does not apply.

A deemed distribution also permanently reduces your account balance. The taxed loan keeps counting as one of your two allowed loans and keeps counting as an outstanding balance when the TSP calculates your maximum for any future loan. You can repay a taxed loan in full while you are still employed, but once you separate, that door closes.¹²

1
eCFR. 5 CFR Part 1655 – Loan Program
2
The Thrift Savings Plan (TSP). TSP Vesting Requirements and the TSP Service Computation Date
3
The Thrift Savings Plan (TSP). Entering Nonpay Status
4
The Thrift Savings Plan (TSP). TSP Loans
5
The Thrift Savings Plan (TSP). Buying a House
6
eCFR. 5 CFR 1655.6 – Amount of Loan
7
Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
8
eCFR. 5 CFR 1655.18 – Spousal Rights
9
The Thrift Savings Plan (TSP). Marriage and Spouse’s Rights
10
eCFR. 5 CFR 1655.16 – Reamortization
11
Thrift Savings Plan. Taxed Loans and Foreclosures
12
eCFR. 5 CFR 1655.15 – Deemed Distributions and Loan Offsets
13
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions