Questions about Residential TSP Loan

[JackH]

Hello to everyone and this is my first post here. I am hoping to get some advice on residential TSP loans.

I am trying to purchase a home for the first time and I fully understand what taking out a TSP loan will do to my retirement savings. The TSP loan will be very brief, maybe a few months, and then fully paid.
In looking over the required documentation for a residential TSP loan I see that they want a copy of a final contract. Would the final contract include the extra funds added from the TSP loan?

I am confused about this but it seems they will lend you the money only after everything is finalized. It does not seem very useful.

Or maybe I am missing something. Does anyone have an example of what document is acceptable?

Thanks and sorry for the dumb questions. I have looked over the forums and can't see any similar question.

John

 

[Frixxxx]

Remember it's Contract OR Final Settlement.

When you enter into the contract, you provide that with your loan paperwork.

They process that with your amount requested.

I do have two questions for you:
1. Residential Loan interest is not tax deductible, you are aware of that?
2. If you can pay it back quickly, why not just take a General Purpose Loan instead? No additional paperwork required - just the loan request.

As always, I would try to find another way to get the money elsewhere. I'm not a fan of loans from retirement accounts. But I know it is helpful in certain situations.


Frixxxxx

Residential Loan Timing - for additional help, if any.

 

[emars]

This is an old thread, but I have some questions about a tsp residential loan that I am hoping someone can help me with. I already closed on my house and I am now wanting to get a residential loan(there is a 2 year window to this). I submitted my contract and am waiting to hear back but I am curious if my loan amount is strictly limited to the amount I paid out of pocket for downpayment/closing costs. For example if I paid 5k out of pocket would I be able to get a 10K loan. Has anyone been able to get more than the closing costs in a loan? TIA.

 

[evilanne]

I don't think there is a limit based on closing costs but cannot borrow more than the cost of the residence. Depending on your actual account balance the loan amount may be limited. The max for any TSP loan is $50K.
https://www.tsp.gov/PlanParticipation/LoansAndWithdrawals/loans/index.html
https://www.tsp.gov/PlanParticipati...oans/applyingForALoan.html#residentialLoanDoc

Before taking a loan, especially one for more than you need, you may want to consider your opportunity cost. Here is an interesting guide: The TSP Loan Guide - TSP Allocation Guide

 

[emars]

Thanks for your response, that is what I was hoping to hear. Also, I reviewed the link you sent and I completely agree with what it says, I am in a kind of dire situation and have no other options at this point but to pull from retirement. Thanks again!

 

[annclo]

Primary Residence and Residential TSP Loan

Hi All, My question is, what exactly is considered a “primary residence”? Can we purchase a home now with a residential loan if we are planning to move into it in three years when I retire? Thank you for any thoughts.