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Intra-Family Mortgage Calculator

Parents frequently act as lenders on a child's first home. A properly-structured intra-family mortgage — at AFR or above, recorded as a lien, with real payments — preserves the borrower's mortgage interest deduction while keeping principal and interest flowing back to the parents. This calculator sizes the arrangement.

Home purchase price

Borrower's own down payment

Interest rate (≥ AFR)

Amortization term (years)

Balloon at (years, 0 = full amortization)

Borrower marginal tax rate %

Monthly P&I

$1,878

Loan amount

$360,000

Loan-to-value %

90.0%

Year-1 interest (to lender/borrower deducts)

$16,980

Borrower year-1 tax savings

$4,075

Balloon balance (if applicable)

How the math works

$400K purchase with $40K down and $360K intra-family at 4.75% / 30yr: monthly P&I $1,879. Year-1 interest $16,932 — if borrower itemizes at 24% marginal, tax savings $4,064. That exceeds most standard-deduction vs itemize tradeoff thresholds and makes the deduction meaningful.

Record the mortgage lien at the county. Use a template mortgage or deed of trust from your state's title company. Have both sides sign and the lender sends an annual 1098-equivalent to the borrower for tax filing. Zero exotic structuring — standard mortgage practice between family members.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Intra-Family Mortgage Calculator is built to give a quick, browser-based estimate for intra-family mortgage. Parents frequently act as lenders on a child's first home. A properly-structured intra-family mortgage — at AFR or above, recorded as a lien, with real payments — preserves the borrower's mortgage interest deduction while keeping principal and interest flowing back to the parents. This calculator sizes the arrangement. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.

Practical checks

Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
Run a low, base, and high case when the inputs are estimates.
Check the related calculators below when the next decision depends on a different assumption.

How to interpret the intra-family mortgage result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this intra-family mortgage estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

How to Use

Enter home purchase price and down payment from borrower's cash.
Enter AFR-compliant interest rate and amortization term.
See monthly payment, parent's interest income, borrower's deductible interest, and LTV.

Frequently Asked Questions

Can the borrower deduct the interest?

Yes if: (1) borrower's primary residence or second home, (2) loan is secured by and recorded against the property, (3) rate at or above AFR, (4) borrower itemizes (vs standard deduction). Borrower reports deductible amount on Schedule A. In 2026 mortgage interest deductible on up to $750K principal for loans originated post-2017.

Does the loan have to be recorded?

Yes for the interest to be deductible. File a deed of trust or mortgage with the county recorder. A $200 recording fee is cheap protection for the lender. Without a recorded lien, IRS can challenge deductibility and the loan itself has weak priority if the borrower has other creditors.

What if borrower defaults?

Parents can foreclose like any lender — but family dynamics usually intervene first. Common resolutions: modify terms (lower rate, extend term), forgive a portion (becomes gift), or take back the property. Document everything and talk to a RE attorney before acting on default.

Can I do interest-only?

Yes. Interest-only intra-family loans with balloon payoff at a future date (say 7 years) are common. Keeps monthly payment low for the borrower, maintains AFR compliance, and the parents' principal comes back as a lump sum. Just ensure the borrower can refinance or sell at the balloon date.