The Ultimate Guide to TSP Loan Application

In today’s fast-paced world, financial stability and planning for the future are more important than ever. One way to ensure a secure retirement is by participating in the offering a range of investment options. One of the key features of TSP is the ability to take out loans from your account for various financial needs. This comprehensive guide will walk you through the TSP loan application process, eligibility criteria, advantages, disadvantages, and frequently asked questions.

Understanding TSP Loans

To borrow money from their TSP accounts for specific financial needs. Unlike traditional loans, TSP loans offer favorable federal employees.

Eligibility for TSP Loans

Before diving into the application process, it’s crucial to understand if you are eligible for a TSP loan. To be eligible, you must:

  • Be employed by the federal government.
  • Have a minimum of $1,000 in your TSP account.
  • Not have any outstanding TSP loans or be in “non-pay” status.

The TSP Loan Application Process

Now that you meet the eligibility criteria, let’s TSP loan.

Step 1: Determine Your Loan Amount

The first step is to determine how much money you need and how much you can borrow from your TSP account. 

Step 2: Complete the TSP Loan Application

To initiate the loan application process, you must fill out the TSP loan application form, TSP-20. This form is available on the TSP website or from your agency’s personnel or benefits office.

Step 3: Submit the Application

After completing the application form, submit it to the TSP for processing. You can do this online through the TSP website or by mailing the form to the TSP Service Office.

Step 4: Await Approval

Once your application is submitted, the TSP will review it. If approved, you will receive.

Step 5: Repayment

TSP loans must be repaid through payroll deductions. The loan term can vary but should be at most five years, except for loans used to purchase a primary residence.

Pros and Cons of TSP Loans


  • Low-Interest Rates: TSP loans typically have lower interest rates compared to traditional loans.
  • No Credit Check: No credit check is required to obtain a TSP loan.
  • Flexible Repayment: You can choose the repayment term, making it easier to manage your finances.


  • Potential Loss of Earnings: When you take out a TSP loan, the borrowed amount is no longer invested, potentially leading to missed investment gains.
  • Tax Implications: If you leave federal service with an outstanding TSP loan, you may face penalties and taxes on the unpaid balance.


In conclusion, the Thrift Savings Plan offers federal employees a valuable opportunity to secure their financial future. TSP loans can provide much-needed financial assistance with favorable terms. However, weighing the pros and cons carefully and considering your long-term financial goals before applying for a loan is essential.


1. Can I have multiple TSP loans simultaneously?

No, you can only have one outstanding TSP loan at a time.

2. What happens if I default on my TSP loan?

If you default on your TSP loan, the remaining balance will be declared as a taxable distribution, and you may face penalties.

3. Can I use a TSP loan for any purpose?

TSP loans can be used for various purposes, including education expenses, home purchase, or to cover unexpected medical expenses.

4. Is there a waiting period before I can apply for a TSP loan?

There is no waiting period to apply for a TSP loan, but you must meet the eligibility criteria.

5. Can I pay off my TSP loan early?

Yes, you can repay your TSP loan before the scheduled maturity date without incurring any prepayment penalties.

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