[{"data":1,"prerenderedAt":7},["ShallowReactive",2],{"faq-standard-11796":3},{"rec_id":4,"title":5,"text":6},"11796","How do I calculate my average mortgage balance for a mixed-use mortgage?","To calculate the average mortgage balance for your mixed-use mortgage, do the following:\n\u003Col>\n\u003Cli>Figure the balance for each of your mortgages for each month. You can combine any mortgages that started in the same time period shown on this screen. This balance is the amount of the loan proceeds, reduced by your principal payments on the mortgage previously applied. Principal payments on a mixed-use mortgage are applied in full to each type of debt until its balance is zero, in the following order:\n\u003Col>\n\u003Cli>First, any home equity debt (debt that wasn't used to buy, build, or substantially improve the home).\u003C/li>\n\u003Cli>Second, any grandfathered debt (any mortgage or portion of a mortgage (due to refinancing) that originally started on or before October 13, 1987).\u003C/li>\n\u003Cli>Third, any home acquisition debt (debt that was used to buy, build, or substantially improve the home).\u003C/li>\n\u003C/ol>\n\u003C/li>\n\u003Cli>Add together the monthly balances for each mortgage that started in the same time period from step 1, items b and c. Then divide by 12.\u003C/li>\n\u003C/ol>\n\u003Cb>For example:\u003C/b> On March 2, 2024, you took out a second mortgage for $200,000. You used $180,000 of the proceeds to make substantial improvements to your home and the remaining $20,000 to buy a car. Under the loan agreement, you must make principal payments of $1,000 at the end of each month. During 2024, your principal payments on the second mortgage totaled $10,000.\n\u003Cbr>\u003Cbr>\nYou must figure the average balance for the part of your second mortgage that was home acquisition debt. Since the second mortgage started in March of 2024, the balance was $0 for January and February of 2024. The March through December balances were all $180,000 because none of your principal payments applied to the home acquisition debt. The principal payments for 2024 are all applied to the home equity debt first reducing its balance to $10,000 by the end of 2024 ($20,000 minus the $10,000 of principal payments for 2024). The monthly balances of the home acquisition debt total $1,800,000 ($180,000 x 10 months). Therefore, the average balance of the home acquisition debt for 2024 was $150,000 ($1,800,000 divided by 12 months).\n\u003Cbr>\u003Cbr>\nFor 2025, your principal payments for January through October are applied to the home equity debt and reduce this debt to $0. The balance of the home acquisition debt remains $180,000 for these months. Because your November and December principal payments are applied to the home acquisition debt, the November balance is $179,000 ($180,000 minus $1,000 principal payment) and the December balance is $178,000 ($179,000 balance from November minus $1,000 principal payment). The monthly balances total $2,157,000 (($180,000 x 10 months) + $179,000 + $178,000). You'd then calculate your average balance to be $179,750 ($2,157,000 divided by 12 months).\n\u003Cbr>\u003Cbr>\nSee \u003Ca href=\"https://www.freetaxusa.com/taxes2025/formdownload?sid=4&form=f_pub_936.pdf\" target=\"_blank\">IRS \u003Ci>Publication 936\u003C/i>\u003Cspan class=\"append_pdf\"> \u003C/span>\u003C/a> for more information.",1777391600554]