Yorktown, VA · Member since 2017 · 19 posts · 5 votes
Good evening. Has anyone used a loan against their 401K or Thrift Savings Plan (TSP is 401K for government and military) as a down payment toward a Flip.
TSP will allow a loan against your balance with a 2% interest rate. The best part is that the interest paid is to yourself. There are two types of loans; General TSP Loan (12-60 Mo) and Real Estate (up to 15 Yrs).
The real estate TSP loan can only be used for a primary residence. However, the General TSP loan can be used for whatever you want.
Investor · Littleton, CO · Member since 2017 · 66 posts · 39 votes
9y
@Eric Villafana Hi, I took a 50k loan from my TSP about 10 years ago to pick up another rental when the market crashed. Paid it back over five years to myself with a small amount of interest. The rental has made me way more than the stock market would have.
If you pay it back early, you still cannot take another loan out right away, they make you wait a while to start a new loan. The service fee was only $50 for the loan.
Investor · Littleton, CO · Member since 2017 · 66 posts · 39 votes
9y
@Eric Villafana Hi, I took a 50k loan from my TSP about 10 years ago to pick up another rental when the market crashed. Paid it back over five years to myself with a small amount of interest. The rental has made me way more than the stock market would have.
If you pay it back early, you still cannot take another loan out right away, they make you wait a while to start a new loan. The service fee was only $50 for the loan.
Investor · Littleton, CO · Member since 2017 · 66 posts · 39 votes
9y
@Eric Villafana , It is a sliding scale. Basically your new loan can only be the lower of 50k or any amount you owed during the previous 12 months. So at a five year amortization at the end of loan you can only take 50,000 less the amount owed a year earlier around 10k, so about 40k. If you wait a full twelve months after paying off the loan, you can take another 50k loan out. Hope this helps.