- Mortgage amount
Original or expected balance for your mortgage. Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately). Any interest paid on first or second mortgages over this amount is not tax deductible. Home equity loans are limited to $100,000 or the amount of equity you have in your home. Our calculator limits your interest deduction to the interest payment that would be paid on a $1,000,000 mortgage.
- Interest rate
Annual interest rate for this mortgage.
- Interest rate after taxes
Annual effective interest rate, after taxes are taken into account. Please note that in addition to the $1,000,000 mortgage debt limit; this calculator assumes that your itemized deductions will exceed the standard deduction for your income tax filing status. If your itemized deductions don't exceed your standard deduction, the benefit of deducting the interest on your home will be reduced or eliminated. For 2008, the standard deductions are $10,950 for married couples filing jointly, $5,450 for married couples filing separately and singles, and $8,000 for heads of household. You should also be aware that the total tax savings may be less for higher incomes that have their allowable itemized deductions phased out.
- Term in years
The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.
- Monthly payment
Monthly principal and interest payment (PI).
- Federal tax rate:
The marginal Federal tax rate you expect to pay. Use the table below to assist you in estimating your 2007 tax rate.
Filing Status and Income Tax Rates 2008
||Married filing jointly
or Qualified Widow(er)
||Head of household
||Married filing separately
||$0 - 16,050
||$0 - 8,025
||$0 - $11,450
||$0 - 8,025
- State tax rate:
The marginal state tax rate you expect to pay.
- Annual Percentage Rate (APR)
A standard calculation used by lenders. It is designed to help borrowers compare different loan options. For example, a loan with a lower stated interest rate may be a bad value if its fees are too high. Likewise, a loan with a higher stated rate with very low fees could be an exceptional value. APR calculations incorporate these fees into a single rate. You can then compare loans with different fees, rates or different terms.
- APR after taxes
Annual percentage rate after taxes are taken into account. Unlike your after-tax interest rate, the APR after taxes takes closing costs into account.
- Loan origination percent
The percent of your loan charged as a loan origination fee. For example, a 1% fee on a $120,000 loan would cost $1,200.
- Discount points
Total number of "points" purchased to reduce your mortgage's interest rate. Each "point" costs 1% of your loan amount. As long as the points paid are not a broker's commission, they are considered tax deductible in the year that they were paid.
- Other fees
- Any other fees that should be included in the APR calculation. These fees can vary by lender, but at a minimum usually includes prepaid interest.