EXECUTION

                       FIRST HORIZON ASSET SECURITIES INC.

                       MORTGAGE PASS-THROUGH CERTIFICATES
                                 SERIES 2005-AR2

                                 TERMS AGREEMENT
                                 ---------------
                           (to Underwriting Agreement,
                             dated October 25, 2004,
                    between the Company and the Underwriter)


First Horizon Asset Securities Inc.                           New York, New York
4000 Horizon Way                                                  April 25, 2005
Irving, Texas 75063

      Credit Suisse First Boston LLC (the "Underwriter") agrees, subject to the
terms and provisions herein and of the captioned Underwriting Agreement (the
"Underwriting Agreement"), to purchase such Classes of Series 2005-AR2
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
2005-AR2 Certificates are registered with the Securities and Exchange Commission
by means of an effective Registration Statement (No. 333-119657). Capitalized
terms used and not defined herein have the meanings given them in the
Underwriting Agreement.

      Section 1. The Mortgage Pools: The Series 2005-AR2 Certificates shall
evidence the entire beneficial ownership interest in four pools (the "Mortgage
Pools") of primarily 30-year adjustable rate first lien, fully amortizing,
one-to-four family residential mortgage loans (the "Mortgage Loans") having the
following characteristics as of April 1, 2005 (the "Cut-off Date"):

            (a) Aggregate Principal Amount of the Mortgage Pools: Approximately
      $281,706,798 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 included in Pool I, Pool II, Pool III and Pool IV shall
      be 360 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, interest rates and 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%:




               Principal               Interest            Class Purchase
Class           Balance                  Rate             Price Percentage
-----           -------                  ----             ----------------
B-1           $4,648,000.00          Variable(1)           100.347656250%
B-2           $1,972,000.00          Variable(1)            99.632812500%
B-3           $1,127,000.00          Variable(1)            98.042968750%

(1)   The interest rates for these classes of Certificates are variable and will
      be calculated as described in the Prospectus Supplement.

            (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 Certificate Principal
Balance thereof plus accrued interest at the per annum initial interest rate
applicable thereto from and including the Cut-off Date up to, but not including,
April 29, 2005 (the "Closing Date").

      Section 4. Required Ratings: The Offered Certificates shall have received
Required Ratings of (i) at least "AAA" by Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. and (ii) at least "AAA" by Fitch
Ratings.

      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
between the Underwriter and the Company.

                                                  Very truly yours,


                                                  CREDIT SUISSE FIRST BOSTON LLC


                                                  By:
                                                      --------------------------
                                                      Name:
                                                      Title:

The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.


FIRST HORIZON ASSET SECURITIES INC.


By:
    -------------------------------
    Name:  Alfred Chang
    Title: Vice President



FIRST HORIZON HOME LOAN CORPORATION


By:
    -------------------------------
    Name:
    Title: