TSP Loan Calculator: Repayments and Retirement Opportunity Cost
Use this guide to understand the assumptions, inputs, results, and next steps behind the calculator.
Created by Luis Gonzalez · Last updated August 21, 2026
A TSP loan lets an eligible participant borrow from their Thrift Savings Plan account and repay the balance, with interest, through payroll deductions. The payment goes back into the account, but money borrowed is temporarily out of the investments it would otherwise hold. This calculator estimates monthly payments, interest and fees, and the modeled opportunity cost of borrowing.
The result is a comparison, not a prediction of actual fund performance. For other borrowing comparisons, see the 401(k) Loan Calculator or compare a loan with a TSP withdrawal.
Default Example: What the Results Mean
With the defaults—$25,000 borrowed for five years at 4.25%, a $150,000 TSP balance, an assumed 7% investment return, and a $50 origination fee—the estimated monthly payment is $463.24. The calculator reports $2,844 total interest, $4,343 opportunity cost, and $7,187 total true cost.
Here is the payment calculation. The monthly interest rate is 4.25% ÷ 12 = 0.3542%, or about 0.003542 as a decimal. There are five years × 12 months = 60 payments.
Monthly payment = loan amount × monthly rate × (1 + monthly rate)^number of payments
÷ ((1 + monthly rate)^number of payments − 1)
Using the defaults, the payment formula gives approximately $463.24 per month. Total payments are about $463.24 × 60 = $27,794. The reported interest-and-fee amount is calculated as total payments − principal + origination fee: $27,794 − $25,000 + $50 = approximately $2,844. So the result card labeled “Total Interest” includes the origination fee as well as financing interest.
The model starts with $150,000 without a loan and $125,000 after subtracting the $25,000 loan. It grows both balances using the assumed 7% return and adds modeled annual loan payments back to the account. At year 10, it shows $295,073 without borrowing and $290,730 with borrowing, a difference of $4,343. Adding that modeled opportunity cost to $2,844 gives the $7,187 total true cost.
What to Enter
Enter the proposed loan amount, interest rate, and repayment term. Add your current TSP balance and an expected investment return to estimate the cost of money being out of the market. The origination fee is included in the calculator’s “Total Interest” result.
The calculator includes a loan-type input, but the supplied calculation uses the stated loan amount, interest rate, term, balance, return, and fee; it does not apply separate loan-type rules in the result formula. Confirm current loan eligibility, limits, fees, and repayment conditions with the official TSP loan information.
Compare the result with other options: a 401(k) loan repayment calculator, a TSP contribution calculator, or a family loan impact calculator.
How TSP Borrowing Can Affect Retirement Savings
Loan payments return principal and interest to your account, but this does not make borrowing cost-free. The borrowed amount may miss investment gains while outstanding, and repayment money may be invested later than it would have been without the loan. The calculator expresses this as opportunity cost by comparing two projected balances.
The model assumes the selected annual return applies consistently. Real markets move unevenly, so a loan taken before a market rise could have a different cost from one taken before a decline. The tool also simplifies payment and investment timing by modeling payments annually within a year; real repayments generally occur through payroll deductions. The opportunity-cost figure is therefore an illustration of the assumption, not a guaranteed loss.
Also account for cash-flow risk. Payments reduce take-home pay, and leaving a federal job can affect the loan’s repayment requirements. A missed or unresolved loan balance may have tax consequences. Review current loan terms before borrowing and compare alternatives such as reducing the expense, using short-term savings, or changing the timing.
Formula Details
Monthly rate = annual loan interest rate ÷ 12
Total interest result = (monthly payment × number of monthly payments) − loan principal + origination fee
Opportunity cost = greater of zero or (projected account without loan − projected account with loan)
Total true cost = total interest result + opportunity cost
These formulas show why the expected-return input matters. Raising the assumed return generally increases the modeled difference between the account that stays invested and the account that begins with the loan amount removed. It does not change the contractual payment calculated from the loan rate and term.
Compare Different Borrowing Choices
Each row changes an assumption from the default. The table gives the expected direction of the change, not a new exact calculator result.
| Scenario | Inputs to test | Likely effect in the model |
|---|---|---|
| Smaller loan | Change $25,000 to $10,000 | Lower monthly payment, financing cost, and amount removed from the account. |
| Shorter repayment | Change five years to three years | Higher monthly payments but fewer months accruing loan interest. |
| Lower assumed return | Change 7% to 4% | Smaller modeled opportunity-cost difference, all else equal. |
| Higher assumed return | Change 7% to 9% | Larger potential cost of funds being out of the market under the model. |
Compare an alternative loan with a TSP growth projection and your actual monthly budget. A smaller payment can be easier to manage, but a longer term usually means more total interest. A shorter term can lower interest but may strain cash flow.
Common TSP Loan Questions
Is the 7% return in the example guaranteed?
No. It is an assumption used to compare two hypothetical account paths. TSP investments can earn more or less, including negative returns.
Does “Total Interest” include the fee?
Yes. In this calculator, the total interest result equals total payments minus the principal plus the origination fee. In the default example, that is roughly $27,794 − $25,000 + $50 = $2,844.
Is borrowing from TSP better than withdrawing money?
A loan is repaid to the account under its terms, while a withdrawal permanently removes money and can trigger taxes or penalties. But a loan still creates payment obligations and may miss investment growth. Compare a TSP withdrawal estimate with a retirement withdrawal calculator before deciding.
Should I choose a shorter term or a lower monthly payment?
A shorter term usually increases each payment but reduces the time interest accrues. A longer term can ease monthly cash flow but may raise total interest. Test both payment sizes against your budget rather than choosing only by total cost.
Does the calculator determine whether I qualify?
No. It does not establish eligibility or confirm the maximum amount available. Check your account and the current TSP rules. The IRS also explains general tax treatment of qualified plan distributions, which can matter if a loan becomes a taxable distribution.
What happens if I leave federal service?
Repayment requirements may change when employment ends, and unpaid amounts can have tax consequences. The calculator does not model separation, loan offsets, or missed-payment scenarios. Confirm those rules with TSP before relying on a loan.
Next Steps Before Borrowing
Use the calculator to compare amount, term, and return assumptions, then verify the current TSP fee and repayment rules. Make sure the payment fits your paycheck even if other costs rise. If borrowing would require stopping contributions, also estimate the value of lost contributions and agency match with the TSP Match Calculator.
For a retirement-wide view, compare projected savings with a retirement goal calculator and test how long income may last with the how-long-will-my-money-last calculator. The best choice is the one that solves the near-term cash need without creating an unmanageable repayment or retirement shortfall.