Fundamentals

Question 1

What is the maximum mortgage amount for which interest is deductible when filing jointly?

Answer 1

$750,000

This applies to mortgages used to buy, build, or improve a taxpayer’s home.

Question 2

Is the interest on mortgage loans deductible if the proceeds are used for purposes other than buying, building, or improving a home?

Answer 2

No

This includes home equity loans where proceeds are not used for home improvement.

Question 3

If home equity loan proceeds are used to improve the taxpayer’s home, what happens to the interest deduction?

Answer 3

The interest is deductible

This applies specifically to home improvements.

Question 4

What types of mortgage loans allow for interest deduction?

Answer 4

Mortgages used to buy, build, or improve a taxpayer’s home

This includes home equity loans when used for improvement.

Question 5

PITI

Answer 5

” your PITI (principal, interest, taxes, and insurance) payment should ideally be less than 28% of your gross monthly income; this is considered a good guideline for how much of your income to allocate towards housing costs by most lenders.

Key points about PITI and income
percentage:
28% rule:
This is the most common guideline, meaning your monthly PITI payment should not exceed 28% of your gross monthly income.

36% rule:
This rule considers your total debt payments, including your PITI, and states that all your debt combined should not exceed 36% of your gross
monthly income.

Question 6

Mortgage point

Answer 6

1 point = 1%