Use this calculator to estimate the after-tax interest rate for your mortgage which reflects the tax savings you obtain by virtue of the interest on your first mortgage of your primary home being deductible from your gross income.

Determine your marginal federal tax rate by dividing the sum of your last 2 years federal income taxes by your Adjusted Gross Income for the same period. The AGI can be found near the bottom of your tax returns. Determine your marginal state income tax rate in the same manner. 

Remember that your real estate tax is deductible also. This calculator does not take that additional savings into account. It also assumes your income is the same before and after acquiring the mortgage. Finally, it doesn't account for changes in marital status or family size or number of wages earners on your tax returns before vs. after acquiring the mortgage.

By playing with the figures, you will see that the difference between the Nominal and Effective Interest Rate increases as your marginal tax rates increase. In effect, it is more important to own vs. rent as your income increases.

(Enter percentages (without % signs) and then click "Calculate".

Mortgage Interest Rate
Marginal Federal Tax Rate
Marginal State Tax Rate

Effective After-Tax Loan Interest Rate: %