Mortgage Interest

Loading the player...

DEFINITION of 'Mortgage Interest'

The interest charged on a loan used to purchase a residence. Mortgage interest is charged for both primary and secondary loans, home equity loans, lines of credit, and as long as the residence is used to secure the loan.

Mortgage interest is deductible on form 1040.

BREAKING DOWN 'Mortgage Interest'

Mortgage interest is one of the major itemized deductions personal taxpayers can have. Only the mortgage interest on the first $1 million (aggregated) of a first or second home purchase can be deducted on the Schedule A.

Mortgage interest on rental or investment properties can be deducted on Schedule E.

RELATED TERMS
  1. Mortgage Interest Deduction

    A common itemized deduction that allows homeowners to deduct ...
  2. IRS Publication 936

    A document published by the Internal Revenue Service (IRS) that ...
  3. Home-Equity Loan

    A consumer loan secured by a second mortgage, allowing home owners ...
  4. Interest Deduction

    A deduction for taxpayers who pay certain types of interest. ...
  5. Consumer Interest

    A type of interest that is charged for personal loans, including ...
  6. Home Mortgage

    A loan given by a bank, mortgage company or other financial institution ...
Related Articles
  1. Personal Finance

    Deducting Interest on Your Second Mortgage

    It's a little tricky, but the effort can save you thousands.
  2. Personal Finance

    Tax Deductions on Mortgage Interest

    If you're a homeowner, this is one item you want to understand and use on your return.
  3. Retirement

    Reverse Mortgages and Your Taxes

    It pays to know the tax benefits from getting a reverse mortgage. Two major considerations: Are the proceeds taxable and is the interest tax deductible?
  4. Personal Finance

    Mortgage Basics: Conclusion

    By Lisa SmithLet's recap what we've learned in this tutorial: At its most basic, a mortgage is a loan used to purchase a house. There are two primary types of mortgages: fixed rate and ...
  5. Personal Finance

    Calculating the Mortgage Interest Tax Deduction

    The amount of money you save by paying your mortgage off quickly will far exceed any benefit from the mortgage interest tax deduction.
  6. Personal Finance

    Reduce Interest With An All-In-One Mortgage

    "Offset" mortgages combine a checking account, home-equity loan and mortgage into one account.
  7. Personal Finance

    Financing Basics For First-Time Homebuyers

    If you're looking to get your first mortgage, there are many financing options available.
  8. Retirement

    How Does A Reverse Mortgage Work?

    The basics of getting a reverse mortgage, with detailed information on how to qualify and what to watch out for.
  9. Retirement

    The Reverse Mortgage: A Retirement Tool

    Discover another way to fund your retirement without having to make payments on a loan.
  10. Personal Finance

    Shopping for a mortgage in 2016? Use this tool first.

    As home-buying technology has progressed, the process of finding the best mortgages rates for 2016 can all be done online.
RELATED FAQS
  1. Are personal loans tax deductible?

    Find out whether interest on personal loans is tax deductible and what types of loan interest can be used to reduce your ... Read Answer >>
  2. Which loan should I pay off first?

    I have a $33,000 mortgage at 4.5% interest due in June 2019. I also have $627 in monthly car loan payments for loans that ... Read Answer >>
  3. What type of loan should I use for my home repairs?

    I am past retirement age and working full time. I have a mortgage on my home. I need to purchase a new roof and tenting for ... Read Answer >>
  4. How does the loan-to-value ratio affect my mortgage payments?

    Understand what the loan to value ratio is, how the ratio is calculated and learn how it has an impact on your mortgage payments ... Read Answer >>
  5. What are the pros and cons of a simple-interest mortgage?

    Learn the difference between a simple interest mortgage and a standard mortgage, along with their relative advantages and ... Read Answer >>
  6. What is the difference between a PMI (primary mortgage insurance) loan and a Federal ...

    Understand the difference between a conventional mortgage that requires primary mortgage insurance and a Federal Housing ... Read Answer >>
Trading Center