EXECUTION

                       FIRST HORIZON ASSET SECURITIES INC.

                       MORTGAGE PASS-THROUGH CERTIFICATES
                                 SERIES 2005-AR5

                                 TERMS AGREEMENT
                           (to Underwriting Agreement,
                              Dated August 24, 2005
                    between the Company and the Underwriter)


First Horizon Asset Securities Inc.                           New York, New York
4000 Horizon Way                                             September 26, 2005
Irving, Texas  75063

      Citigroup Global Markets Inc. (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-AR5
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-AR5 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 2005-AR5 Certificates shall
evidence the entire beneficial ownership interest in four mortgage pools (the
"Mortgage Pools") of conventional, adjustable rate, fully amortizing one- to
four-family residential mortgage loans (the "Mortgage Loans") having the
following characteristics as of September 1, 2005 (the "Cut-off Date"):

            (a) Aggregate Principal Amount of the Mortgage Pools:
$216,253,164.04 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 the Mortgage Pools shall be between 240 and 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
-----               -------               ----          ----------------

I-A-1          $  20,457,000.00        Variable(1)      101.054687500%
I-A-2          $     793,000.00        Variable(1)      101.054687500%
II-A-1         $ 101,194,000.00        Variable(1)      101.277343750%
II-A-2         $   3,925,000.00        Variable(1)      101.277343750%
II-A-R         $         100.00        Variable(1)      101.277343750%
III-A-1        $  13,980,000.00        Variable(1)      101.257812500%
III-A-2        $     542,000.00        Variable(1)      101.257812500%
IV-A-1         $  67,576,000.00        Variable(1)      101.023437500%

---------
(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 Principal Balance thereof
plus accrued interest at per annum initial interest rate applicable thereto from
and including the Cut-off Date up to, but not including, September 30, 2005 (the
"Closing Date").

      Section 4. Required Ratings: The Offered Certificates shall have received
Required Ratings of at least "AAA" from each of Fitch Ratings and Standard and
Poor's, a division of the McGraw-Hill Companies, Inc.

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

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      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 Underwriters and the Company.

                                                Very truly yours,

                                                CITIGROUP GLOBAL MARKETS INC.

                                                By: /s/ Peter D. Steinmetz
                                                    ----------------------------
                                                    Name:  Peter D. Steinmetz
                                                    Title: Director

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

FIRST HORIZON ASSET SECURITIES INC.

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

FIRST HORIZON HOME LOAN CORPORATION

By: /s/ Terry McCoy
    -----------------------------------
    Name:  Terry McCoy
    Title: Executive Vice President



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