Thinking of a TSP Loan to fund Flip Down Payment

[Eric Villafana]

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.

Thoughts? Experiences?

Let me know! 

I look forward to some good info.

-Eric Villafana

[Jay Jasunas]

@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. 

Best of luck.