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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Borrowing from your TSP is a great option.  Negligible fees, the interest you pay goes to yourself, and beyond documenting that the money comes from your own retirement account, it won't count towards your debt to income ratio.

I have twice borrowed from my retirement accounts to facilitate house purchases.

You are misinformed about there being a pre-tax/post-tax issue.  You borrow $X, you pay back $X, there is no additional tax burden.  To see this easily, imagine that you borrowed $50K, cashed the check, and then immediately transferred the $50K back to the TSP to repay the loan.  Clearly, there are no additional taxes.  It is no different if you repay the loan after a few months.[/quote]

The difference is that the $50K taken from the TSP was pre-tax. After a few months you are paying back with post-tax dollars. So that $50K paid back could have been $75K if it went straight to TSP out of your paycheck.[/quote]

This is wrong.  You borrow $50K; put it into X (X could be a down payment, a bank account whatever).  You save $50K over several months, in bank account Y.  You decide to repay the loan, from either X or Y, both of which have $50K in them.  Repaying the loan with the same funds that were loaned to you (X) clearly does not incur additional taxes.  Moreover, aside from being in different accounts, there is no apparent difference between X and Y.  It does not matter which you use to repay the loan, either way it involves one of your accounts decreasing in value by $50K.

I think your error is the following.  You are envisioning a scenario in which one borrows $50K from a retirement account, and then repays it by stopping contributions, and applying the extra money from each paycheck to repaying the loan until the balance is zeroed out.  But that's a tangential issue; having an outstanding loan does not affect contributions in any way.  [/quote]

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