Yes, you can use your TSP to buy a house, and for most federal employees and service members the practical route is a TSP residential loan that lets you borrow against your own contributions and repay yourself through payroll. An in-service withdrawal is also possible, but it works cleanly only if you are at least 59½, because buying a home is not on the TSP’s short list of financial hardships.
Who Qualifies for a TSP Residential Loan
You have to be actively employed by the federal government or serving in the uniformed services to apply. Once you separate, new loans are off the table.1eCFR. 5 CFR Part 1655 – Loan Program
Your account must hold at least $1,000 in your own contributions and the earnings on them. Agency matching and automatic contributions do not count toward that threshold, and the minimum you can borrow is $1,000.2The Thrift Savings Plan (TSP). TSP Loans
Only one residential loan can be outstanding at a time. If you just paid one off, more than 30 business days have to pass before you can apply again.1eCFR. 5 CFR Part 1655 – Loan Program
What the Loan Can and Cannot Fund
The loan has to be for purchasing or building your primary residence. That excludes several things people ask about:
- Second homes, vacation homes, and rental or investment properties.
- Refinancing or paying off an existing mortgage on a home you already own.1eCFR. 5 CFR Part 1655 – Loan Program
- Buying a vacant lot with no construction contract attached.1eCFR. 5 CFR Part 1655 – Loan Program
- Renovations, additions, or remodeling of your current home.
Eligible costs are the amounts you still owe at closing, including the down payment and settlement fees. Money you have already spent is a problem. Earnest money or good-faith deposits paid before you request the loan cannot be reimbursed out of the proceeds.3Thrift Savings Plan. TSP Loans Booklet Apply before you start writing checks.
If your co-buyer is someone other than your spouse, the TSP will only count your share of the purchase costs when it decides how much you can borrow.1eCFR. 5 CFR Part 1655 – Loan Program
How Much You Can Borrow
Federal tax law caps retirement plan loans, and the TSP follows those rules. Your maximum is the smallest of three figures:
- The total of your own employee contributions plus their earnings.
- Half of your vested employee balance (including any outstanding loan balance), or $10,000, whichever is greater, minus any outstanding loan balance.
- $50,000 minus the highest outstanding TSP loan balance you carried at any point in the previous 12 months.1eCFR. 5 CFR Part 1655 – Loan Program
The 12-month lookback is the one that catches people off guard. If you carried a $20,000 general-purpose loan six months ago and paid it off, your residential loan ceiling is $30,000 today, no matter what your current balance is. The lookback resets only after a full 12 months have passed since that high point.
The $10,000 floor in the second test helps if your balance is small. If half of your employee money comes to only $7,000, you can still borrow up to $10,000 under that prong, so long as the other two caps allow it.
Repayment, Interest, and the Real Cost
A residential loan gives you up to 15 years (180 months) to repay, versus five years for a general-purpose loan.1eCFR. 5 CFR Part 1655 – Loan Program Repayment starts within 60 days of disbursement.2The Thrift Savings Plan (TSP). TSP Loans
Payments come out of your paycheck automatically. You can also send extra payments by check or set up direct debit from a personal bank account to pay the loan down faster.1eCFR. 5 CFR Part 1655 – Loan Program
The interest rate is fixed for the life of the loan at the G Fund rate in effect on the 15th of the month before you submit your request.1eCFR. 5 CFR Part 1655 – Loan Program As of early 2026 that rate is around 4%. The interest goes back into your own account, which people describe as paying interest to yourself. The trade-off is real, though: the borrowed money stops earning whatever your other TSP funds would have earned. If the C Fund returns 8% while your loan rate is 4%, that spread is a cost you don’t see on any statement.
A $100 loan fee comes out of the proceeds at disbursement.1eCFR. 5 CFR Part 1655 – Loan Program
Documents You’ll Need
Loan requests are submitted online through the My Account portal at tsp.gov. There is no paper application form. A residential loan requires supporting documentation, which you must upload within 30 days of the request.4The Thrift Savings Plan (TSP). Buying a House
What you need depends on the situation:
- For a standard purchase, a signed purchase contract, settlement offer, or sales agreement.
- For new construction, a signed builder’s agreement or construction contract.
- If closing costs are part of the request, a loan estimate, closing disclosure, or settlement worksheet from your mortgage company.5eCFR. 5 CFR 1655.20 – Residential Loans
The 30-day window is firm. Miss it, and you start over.
Spousal Consent
If you’re married and covered under FERS or the uniformed services, your spouse has to sign the loan agreement before it can be approved. Under CSRS, the rule is lighter: the TSP notifies your spouse that you’ve applied, but consent is not required.6eCFR. 5 CFR 1655.18 – Spousal Rights
Taking a Withdrawal Instead
An in-service withdrawal pulls money out of your TSP permanently. There’s nothing to repay, and nothing goes back into the account. Whether this option is realistic for buying a home comes down to your age.
Age-Based Withdrawals at 59½ or Older
Once you reach 59½ while still employed, you can take an age-based withdrawal for any reason, including a home purchase. You can take part or all of your vested balance. The TSP withholds 20% of the taxable portion for federal income tax, and you can ask for more. You can also roll the withdrawal into an IRA or another eligible plan to defer the tax.7The Thrift Savings Plan (TSP). In-Service Withdrawal Types and Terms No early withdrawal penalty applies, and you don’t have to prove financial need.
Buying a Home Is Not a Hardship
This is where a common assumption gets people in trouble. Under TSP rules, buying a house does not qualify as a financial hardship. The hardship categories are limited to:
- Recurring negative monthly cash flow
- Unpaid medical expenses not covered by insurance
- Uninsured personal casualty losses
- Unpaid legal fees for a separation or divorce
- Losses from a FEMA-declared major disaster8The Thrift Savings Plan (TSP). Financial Hardship
A down payment isn’t on the list. Many private 401(k) plans do allow home-purchase hardship distributions under IRS rules, but the TSP adopted a narrower set. If you’re under 59½ and want TSP money for a home, the residential loan is realistically the only path.
Taxes on Withdrawals
Loans are not taxable events as long as you repay them on schedule. Withdrawals are taxed right away.
For an age-based withdrawal, the taxable portion (generally everything from a traditional TSP balance) is taxed at your ordinary income rate. The TSP withholds 20% upfront, but your actual tax bill depends on your total income for the year.9The Thrift Savings Plan (TSP). In-Service Withdrawals Booklet
Roth TSP contributions come out tax-free. Roth earnings are also tax-free if they are qualified, meaning the Roth account has been open at least five years and you are 59½ or older.7The Thrift Savings Plan (TSP). In-Service Withdrawal Types and Terms
Any withdrawal before age 59½ generally carries an additional 10% early withdrawal penalty on top of ordinary income tax.7The Thrift Savings Plan (TSP). In-Service Withdrawal Types and Terms
If You Leave Federal Service with a Loan Outstanding
Payroll deduction stops the moment you separate. You can keep making payments yourself, by mail or direct debit from a bank account.1eCFR. 5 CFR Part 1655 – Loan Program If no payments come in within 90 days of your reported separation, the TSP forecloses the loan.10Thrift Savings Plan. Effect of Nonpay Status on Your TSP Account
Foreclosure treats the remaining balance as a taxable distribution. Ordinary income tax applies, plus the 10% early withdrawal penalty if you are under 59½. There is one way out: you can roll the taxable portion into your TSP account, an IRA, or another eligible employer plan by the due date (including extensions) of your federal tax return for the year of the foreclosure. Completing that rollover erases both the tax and the penalty.11Thrift Savings Plan (TSP). Tax Treatment for TSP Payments The practical hurdle is finding the rollover cash on your own, since the TSP already handed the loan proceeds to you long ago.
How to Apply
Log in to My Account at tsp.gov to start either a loan request or a withdrawal. The portal handles document uploads and lets you confirm banking information for direct deposit.2The Thrift Savings Plan (TSP). TSP Loans
After approval, funds are typically disbursed within a few business days. Electronic funds transfer is faster than a paper check, which matters when a closing date is on the calendar. Track the status through your My Account dashboard so you know when the money will land.