FIRST HORIZON ASSET SECURITIES INC. MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2006-1 TERMS AGREEMENT (to Underwriting Agreement, dated March 24, 2006 among the Company, First Horizon Home Loan Corporation and the Underwriter)

EXECUTION

FIRST HORIZON ASSET SECURITIES INC.

MORTGAGE PASS-THROUGH CERTIFICATES

SERIES 2006-1

TERMS AGREEMENT

(to Underwriting Agreement,

dated March 24, 2006

among the Company, First Horizon

Home Loan Corporation

and the Underwriter)

First Horizon Asset Securities Inc.	Xxxxxxx, Xxxxxxxxx
0000 Horizon Way	March 24, 2006
Xxxxxx, Xxxxx 00000

FTN Financial Capital Markets, a division of First Tennessee Bank National Association (the “Underwriter”) agrees, subject to the terms and provisions herein and of the captioned Underwriting Agreement (the “Underwriting Agreement”), to purchase such Classes of First Horizon Mortgage Pass-Through Trust 2006-1, Mortgage Pass-Through Certificates, Series 2006-1 (the “Series 2006-1 Certificates”) specified in Section 2(a) hereof (the “Offered Certificates”). This letter supplements and modifies the Underwriting Agreement solely as it relates to the purchase and sale of the Offered Certificates described below. The Series 2006-1 Certificates are registered with the Securities and Exchange Commission by means of an effective Registration Statement (No. 333-125158). Capitalized terms used and not defined herein have the meanings given them in the Underwriting Agreement.

Section 1. The Mortgage Pools: The Series 2006-1 Certificates shall evidence the entire beneficial ownership interest in two mortgage pools (“Pool I” and “Pool II” and, collectively, the “Mortgage Pools”) of conventional, fixed rate, first lien, fully amortizing, one- to four-family residential mortgage loans (the “Mortgage Loans”) having the following characteristics as of March 1, 2006 (the “Cut-off Date”):

(a) Aggregate Principal Amount of the Mortgage Pools: Approximately $302,102,191 aggregate principal balance as of the Cut-off Date, subject to an upward or downward variance of up to 5%, the precise aggregate principal balance to be determined by the Company.

(b) Original Terms to Maturity: The original term to maturity of each Mortgage Loan in Pool I shall be 360 months. The original term to maturity of each Mortgage Loan in Pool II shall be 180 months.

Section 2. The Certificates: The Offered Certificates shall be issued as follows:

(a) Classes: The Offered Certificates shall be issued with the following Class designations, pass-through rates and class principal balances, subject in the aggregate to the variance referred to in Section 1(a)and, as to any particular Class, to an upward or downward variance of up to 5%:

												Required Ratings
Class			Class Principal Balance			Pass-Through Rate			Class Purchase Price Percentage			Fitch			S&P
Class I-A-1		$	9,869,000.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-2		$	27,000,000.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-3		$	1,500,000.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-4		$	1,000,000.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-5		$	55,784,000.00			5.750	%		99.593750000	%		AAA			AAA
Class I-A-6		$	2,324,333.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-7		$	90,000,000.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-8		$	41,213,000.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-9		$	3,033,000.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-10		$	27,294,000.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-11		$	16,330,000.00			6.000	%		99.593750000	%		AAA			AAA
Class I-A-R		$	100.00			6.000	%		99.593750000	%		AAA			AAA
Class II-A-1		$	16,352,000.00			5.250	%		98.343750000	%		AAA			AAA

(b) The Offered Certificates shall have such other characteristics as described in the related Prospectus.

Section 3. Purchase Price: The Purchase Price for each Class of the Offered Certificates shall be the Class Purchase Price Percentage therefor (as set forth in Section 2(a) above) of the initial Class Principal Balance thereof plus accrued interest at the applicable per annum pass-through rate set forth in 2(a) above from and including the Cut-off Date up to, but not including, March 30, 2006 (the “Closing Date”).

Section 4. Required Ratings: The Offered Certificates shall have received at least the Required Ratings from Fitch, Inc. (“Fitch”) and Standard & Poor’s, a division of The XxXxxx-Xxxx Companies, Inc. (“S&P”) set forth in Section 2(a) above.

Section 5. Tax Treatment: One or more elections will be made to treat the assets of the Trust Fund as a REMIC.

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the undersigned a counterpart hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Underwriter, First Horizon Home Loan Corporation and the Company.

Very truly yours,

FTN FINANCIAL CAPITAL MARKETS, a division of First Tennessee Bank National Association

By:___________________________________________________

 Name: Xxxx Xxxxxx

 Title: Senior Vice President

The foregoing Agreement is

hereby confirmed and accepted

as of the date first above written.

FIRST HORIZON ASSET SECURITIES INC.

By:____________________________________

Name: Xxxxxx Xxxxx

Title: Vice President

FIRST HORIZON HOME LOAN CORPORATION

By:____________________________________

Name: Xxxxx X. XxXxx

Title: Executive Vice President