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**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K**

**(Mark      one)**

|   |   |                                                                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
| þ |   | **ANNUAL                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |

**For      the fiscal year ended December 31, 2006**

**or**

|   |   |                                                                                                                                      |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
| o      |   | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |

**For      the transition period from **
**                    **
**      to **
**                    **

**Commission      file number 333-132046-10**

**FIRST      HORIZON ALTERNATIVE MORTGAGE SECURITIES TRUST 2006-AA5**

**FIRST      HORIZON ASSET SECURITIES INC.**

**FIRST      HORIZON HOME LOAN CORPORATION**

|                                                    |   |                                                              |
|---------------------------------------------------------|--------|-------------------------------------------------------------------|
| **Delaware**(State                of Organization)      |   | **75-2808384**(I.R.S.                Employer Identification No.) |
|                                                    |   |                                                              |
| **4000                Horizon Way**                     |   |                                                              |
| **Irving,                TX**                           |   | **75063**                                                         |
| (Address                of principal executive offices) |   | (Zip                Code)                                         |

|                                   |   |                                     |
|----------------------------------------|--------|------------------------------------------|
|                                   |   | **Name                of each exchange** |
| **Title                of each class** |   | **on                which each class**   |
| **to                be so registered** |   | **is                to be registered**   |
|                                   |   |                                     |
| None                                   |   | Not                Applicable            |

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**Securities      registered pursuant to Section 12(g) of the Act:      None.**

**Indicate      by check mark if the registrant is a well-known seasoned issuer, as defined      in      Rule 405 of the Securities Act.**

**Indicate      by check mark if the registrant is not required to file reports pursuant to      Section 13 or**
**Section      15(d)**
**of      the Act.**

**Indicate      by check mark whether the registrant: (1) has filed all reports required to      be filed by Section 13 or**
**15(d)**
**of      the Securities Exchange Act of 1934 during the preceding 12 months and      (2) has been subject to such filing requirements for the past      90 days.**

**Indicate      by check mark if disclosure of delinquent filers pursuant to Item 405 of      Regulation S-K is not contained herein, and will not be contained, to the best      of registrant’s knowledge, in definitive proxy or information statements      incorporated by reference in Part III of this Form 10-K or any      amendment to this**
**Form      10-K**
**.      **

**Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of      the Act).**

**Indicate      by check mark whether the registrant is a shell company (as defined in      Rule 12b-2 of the Act).**

**State      the aggregate market value of the voting and non-voting common equity held      by      non-affiliates computed by reference to the price at which the common equity      was      last sold, or the average bid and asked price of such common equity, as of      the      last business day of the registrant’s most recently completed second fiscal      quarter.**

**Documents      incorporated by Reference.**

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**TABLE      OF CONTENTS**

| PART                  I                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                     | Item 1.                  Business |
|                                                                                                                                                     | Item 1A.                  Risk Factors |
|                                                                                                                                                     | Item 2.                  Properties |
|                                                                                                                                                     | Item 3.                  Legal Proceedings |
|                                                                                                                                                     | Item 4.                  Submission of Matters to a Vote of Security Holders |
|                                                                                                                                                     | Item 1B.                  Unresolved Staff Comments |
|                                                                                                                                                     | Item 1112(b)                  of Regulation AB. Significant Obligors of Pool Assets (Financial                  Information) |
|                                                                                                                                                     | Item 1114(b)(2)                  of Regulation AB. Credit Enhancement and Other Support, Except for                  Certain Derivatives Instruments (Financial Information) |
|                                                                                                                                                     | Item                  1115(b) of Regulation AB. Certain Derivatives Instruments (Financial                  Information) |
|                                                                                                                                                     | Item 1117                  of Regulation AB. Legal Proceedings |
| PART                  II                                                                                                                                 |
|                                                                                                                                                     | Item 9B.                  Other Information |
| PART                  III                                                                                                                                |
|                                                                                                                                                     | Item 1119                  of Regulation AB. Affiliations and Certain Relationships and Related                  Transactions |
|                                                                                                                                                     | Item 1122                  of Regulation AB. Compliance with Applicable Servicing                  Criteria |
|                                                                                                                                                     | Item 1123                  of Regulation AB. Servicer Compliance Statement |
| PART                  IV                                                                                                                                 |
|                                                                                                                                                     | Item 15.                  Exhibits, Financial Statement Schedules |
|                                                                                                                                                     |
| 4.1                  - Pooling and Servicing Agreement                                                                                                   |
| 10.1                  - Mortgage Loan Purchase Agreement                                                                                                 |
| 31.1                  - Rule 13a-14(a)/15d-14(a) Certification (Section 302                  Certification)                                    |
| 33.1                  - Report                  on Assessment of Compliance with Servicing Criteria                  (FHHLC and FTMSI)                   |
| 33.2                  - Report                  on Assessment of Compliance with Servicing Criteria                  (FTBNA)                             |
| 33.3                  - Report                  on Assessment of Compliance with Servicing Criteria                  (BNY)                               |
| 33.4                  - Report                  on Assessment of Compliance with Servicing Criteria                  (FTBNA)                             |
| 34.1                  - Report of Independent Registered Public Accounting Firm (KPMG                  for FHHLC                  and FTMSI)             |
| 34.2                  - Report of Independent Registered Public Accounting Firm (E&Y for The                  Bank of New York)                      |
| 34.3                  - Report of Independent Registered Public Accounting Firm (KPMG                  for FTBNA                  for FHHLC)   |
| 34.4                  - Report of Independent Registered Public Accounting Firm (KPMG                  for FTBNA                  for FHHLC)             |
| 35.1                  - Servicer                  Compliance Statement of FHHLC                  and FTMSI                                               |
| 99.1                  - Schedule of Year-to-Date Principal and Interest Distributions                  to                  Certificateholders            |

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**PART      I**

**The      following Items have been omitted in accordance with General Instruction J      to      Form 10-K:**

**Item 1B.      Unresolved Staff Comments**

**Substitute      information provided in accordance with General Instruction J to Form      10-K:**

**Item 1112(b)      of Regulation AB. Significant Obligors of Pool Assets (Financial      Information).**

**Item 1114(b)(2)      of Regulation AB. Credit Enhancement and Other Support, Except for Certain      Derivatives Instruments (Financial Information).**

**Item 1115(b)      of Regulation AB. Certain Derivatives Instruments (Financial      Information).**

**Item 1117      of Regulation AB. Legal Proceedings.**

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**PART      II**

**The      following Items have been omitted in accordance with General Instruction J      to      Form 10-K:**

**Item 9B.      Other Information.**

**PART      III**

**The      following Items have been omitted in accordance with General Instruction J      to      Form 10-K**

**Substitute      information provided in accordance with General Instruction J to      Form 10-K:**

**Item 1119      of Regulation AB. Affiliations and Certain Relationships and Related      Transactions.**

**Item 1122      of Regulation AB. Compliance with Applicable Servicing      Criteria.**

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**Item 1123      of Regulation AB. Servicer Compliance Statement.**

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**PART      IV**

**Item 15.      Exhibits, Financial Statement Schedules.**

|   | (a) |   | List                of Documents Filed as Part of this                Report |
|--------|-----|--------|------------------------------------------------------------------------------|

|                                     | (1)    |                                                                                                                                                                                                                                                                                                                                                        | Not                Applicable.                                           |
|------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|                                     |   |
|                                     | (2)    |                                                                                                                                                                                                                                                                                                                                                        | Not                Applicable.                                           |
|                                     |   |
|                                     | (3)    |                                                                                                                                                                                                                                                                                                                                                        | See                Item 15 (b), below.                              |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |                                                                     |
|                                     | (b)    |                                                                                                                                                                                                                                                                                                                                                        | Exhibits                Required by Item 601 of Regulation S-K |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |                                                                     |
| ***EXHIBIT                DESCRIPTION*** |
| 4.1                                      |   | Pooling                and Servicing Agreement dated July 1, 2006 by and among FHASI, as                depositor, FHHLC, as master servicer, and The Bank of New York, as                trustee                (incorporated by reference to Exhibit 4.1 of the issuing entity’s Current                Report on Form 8-K filed on August 3, 2006) |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 10.1                                     |   | Mortgage                Loan Purchase Agreement dated July 28, 2006 by and between FHHLC,                as                seller, and FHASI, as purchaser (incorporated by reference to Exhibit                10.1                of the issuing entity’s Current Report on Form 8-K filed on August 3,                2006)                        |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 31.1                                     |   | Rule 13a-14(a)/15d-14(a)                Certification (Section 302 Certification).                                                                                                                                                                                                                                                                |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 33.1                                     |   | Report                on Assessment of Compliance with Servicing Criteria concerning servicing                activities of FHHLC and FTMSI for the year ended December 31,                2006.                                                                                                                                                            |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 33.2                                     |   | Report                on Assessment of Compliance with Servicing Criteria concerning servicing                activities of FTBNA and FTCS for the year ended December 31,                2006.                                                                                                                                                             |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 33.3                                     |   | Report                on Assessment of Compliance with Servicing Criteria concerning servicing                activities of The Bank of New York for the year ended December 31,                2006.                                                                                                                                                       |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 33.4                                     |   | Report                of Assessment of Compliance with Servicing Criteria concerning servicing                activities of FTBNA for the year ended December 31,                2006.                                                                                                                                                                      |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 34.1                                     |   | Report                of Independent Registered Public Accounting Firm concerning servicing                activities of FHHLC and FTMSI for the year ended December 31,                2006.                                                                                                                                                               |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 34.2                                     |   | Report                of Independent Registered Public Accounting Firm concerning servicing                activities of The Bank of New York for the year ended December 31,                2006.                                                                                                                                                          |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 34.3                                     |   | Report                of Independent Registered Public Accounting Firm concerning servicing                activities of FTBNA for FHHLC for the year ended December 31,                2006.                                                                                                                                                               |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 34.4                                     |   | Report                of Independent Registered Public Accounting Firm concerning servicing                activities of FTBNA for FHHLC for the year ended December 31,                2006.                                                                                                                                                               |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 35.1                                     |   | Servicer                Compliance Statement of FHHLC for the year ended December 31,                2006.                                                                                                                                                                                                                                                  |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                        |
| 99.1                                     |   | Schedule                of Year-to-Date Principal and Interest Distributions to                Certificateholders.                                                                                                                                                                                                                                          |

| (c) |   | Omitted. |
|-----|--------|----------|

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**SIGNATURES**

|                                 |   |   |   |                                                                                                        |   |                                                                         |   |   |
|--------------------------------------|--------|--------|--------|-------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|--------|--------|
|                                 |   |   |   | First                Horizon Alternative Mortgage Securities Trust 2006-AA5 (Issuing                Entity) |
|                                 |   |   |   |                                                                                                        |   |                                                                         |
|                                 |   |   |   | By:                First Horizon Asset Securities Inc., as Depositor                                        |
|                                 |   |   |   |                                                                                                        |   |                                                                         |
|                                 |   |   |   |                                                                                                        |   |                                                                         |   |   |
| Dated:                March 26, 2007 |   |   |   | By:                                                                                                         |   | /s/                Terry L. McCoy                                            |
|                                 |   |   |   |                                                                                                        |   | Terry                L. McCoy                                                |   |   |
|                                 |   |   |   |                                                                                                        |   | Executive                Vice President                                      |   |   |
|                                 |   |   |   |                                                                                                        |   | (Senior                Officer of the Depositor in charge of Securitization) |   |   |
|                                 |   |   |   |                                                                                                        |   |                                                                         |   |   |

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**EXHIBIT      INDEX**

| **EXHIBIT** | **DESCRIPTION** |
|-------------|-----------------|
|   |   |
|--------|--------|
| 4.1 | Pooling                and Servicing Agreement dated July 1, 2006 by and among FHASI, as                depositor, FHHLC, as master servicer, and The Bank of New York, as                trustee                (incorporated by reference to Exhibit 4.1 of the issuing entity’s Current                Report on Form 8-K filed on August 3,                2006) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | Mortgage                Loan Purchase Agreement dated July 28, 2006 by and between FHHLC,                as                seller, and FHASI, as purchaser (incorporated by reference to Exhibit                10.1                of the issuing entity’s Current Report on Form 8-K filed on August 3,                2006) |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1 | Rule 13a-14(a)/15d-14(a)                Certification (Section 302                Certification). |
|------|-------------------------------------------------------------------------------------------------------------|

| 33.1 | Report                on Assessment of Compliance with Servicing Criteria concerning servicing                activities of FHHLC and FTMSI for the year ended December 31,                2006. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 33.2 | Report                on Assessment of Compliance with Servicing Criteria concerning servicing                activities of FTBNA and FTCS for the year ended December 31,                2006. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 33.3 | Report                on Assessment of Compliance with Servicing Criteria concerning servicing                activities of The Bank of New York for the year ended December 31,                2006. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 33.4 | Report                on Assessment of Compliance with Servicing Criteria concerning servicing                activities of FTBNA for the year ended December 31,                2006. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 34.1 | Report                of Independent Registered Public Accounting Firm Report concerning                servicing activities of FHHLC and FTMSI for the year ended December                31,                2006. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 34.2 | Report                of Independent Registered Public Accounting Firm concerning servicing                activities of The Bank of New York for the year ended December 31,                2006. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 34.3 | Report                of Independent Registered Public Accounting Firm concerning servicing                activities of FTBNA and FHHLC for the year  ended                December 31, 2006. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 34.4 | Report                of Independent Registered Public Accounting Firm concerning servicing                activities of FTBNA and FHHLC for the year ended December 31,                2006. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 35.1 | Servicer                Compliance Statement of FHHLC for the year ended December 31,                2006. |
|------|------------------------------------------------------------------------------------------------------------|

| 99.1 | Schedule                of Year-to-Date Principal and Interest Distributions to                Certificateholders |
|------|-------------------------------------------------------------------------------------------------------------------|

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