Enter the loan details
Type the loan amount, the term in months, the start date, and the compounding frequency you plan to use for the family loan.
Free tool
Free AFR Family Loan Calculator
The AFR Family Loan Calculator finds the IRS-compliant minimum interest rate, called the Applicable Federal Rate (AFR), for a loan between family members and shows the monthly payment, total interest, and full amortization schedule. Use it to set up an intra-family loan that avoids imputed interest and gift-tax issues.
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Calculator inputs
Enter the family loan details
All calculations run in your browser. Nothing is sent to a server.
Current AFR rates (May 2026)
- Short-term (≤ 3 years): 4.50%
- Mid-term (> 3 to ≤ 9 years): 4.30%
- Long-term (> 9 years): 4.55%
Rates as of May 2026. Always confirm the current AFR before signing the loan. View the IRS AFR rulings index.
Amortization schedule
Month-by-month payment table
Each row shows the payment, principal, interest, and remaining balance. Use it to verify the borrower's progress over the life of the loan.
| Month | Payment | Principal | Interest | Balance | Cumulative interest |
|---|---|---|---|---|---|
| 1 | $925.74 | $750.01 | $175.73 | $49,249.99 | $175.73 |
| 2 | $925.74 | $752.65 | $173.09 | $48,497.34 | $348.82 |
| 3 | $925.74 | $755.29 | $170.45 | $47,742.05 | $519.27 |
| 4 | $925.74 | $757.95 | $167.79 | $46,984.10 | $687.06 |
| 5 | $925.74 | $760.61 | $165.13 | $46,223.49 | $852.19 |
| 6 | $925.74 | $763.28 | $162.46 | $45,460.21 | $1,014.65 |
| 7 | $925.74 | $765.97 | $159.77 | $44,694.24 | $1,174.42 |
| 8 | $925.74 | $768.66 | $157.08 | $43,925.58 | $1,331.50 |
| 9 | $925.74 | $771.36 | $154.38 | $43,154.22 | $1,485.88 |
| 10 | $925.74 | $774.07 | $151.67 | $42,380.15 | $1,637.55 |
| 11 | $925.74 | $776.79 | $148.95 | $41,603.36 | $1,786.50 |
| 12 | $925.74 | $779.52 | $146.22 | $40,823.84 | $1,932.72 |
How it works
Why AFR matters for family loans
The IRS uses the Applicable Federal Rate to draw the line between a real loan and a partial gift. Charging at least the AFR keeps the loan IRS-compliant and avoids unintended imputed interest income for the lender or gift-tax exposure.
Confirm the AFR tier
The calculator auto-picks short, mid, or long-term AFR based on the loan length. You can override the tier manually if you prefer.
Review payments and schedule
See the IRS-minimum AFR rate, the monthly payment, total interest, and the full month-by-month amortization schedule.
FAQ
Common AFR family loan questions
Quick answers about the Applicable Federal Rate, intra-family loans, and how to keep them on the right side of the IRS.
What is the Applicable Federal Rate (AFR)?
The Applicable Federal Rate (AFR) is the minimum interest rate the IRS publishes each month for private loans, including loans between family members. Charging at least the AFR keeps the loan from being treated as a partial gift for tax purposes.
Why do family loans need to charge AFR interest?
If you lend money to a family member at a rate below the AFR, the IRS may impute interest income to you and treat the foregone interest as a gift to the borrower. Using an interest rate equal to or greater than the AFR avoids both imputed interest and unintended gift-tax consequences.
What happens if I charge less than the AFR?
If the loan exceeds $10,000 and the rate is below the AFR, the IRS can impute interest income to the lender and treat the difference as a gift to the borrower. That can trigger income tax on the imputed interest and use up part of your annual gift-tax exclusion or lifetime exemption.
What is the difference between short-term, mid-term, and long-term AFR?
The IRS publishes three AFR tiers based on loan length: short-term (3 years or less), mid-term (more than 3 and up to 9 years), and long-term (more than 9 years). Each month each tier is published at four compounding frequencies: annual, semi-annual, quarterly, and monthly.
Are family loans tax deductible?
For the lender, interest received on a family loan is generally taxable income. For the borrower, interest is only deductible if the loan was used for a qualifying purpose, such as a properly secured mortgage on a primary residence or interest on funds used for a business or investment. A tax advisor can confirm what applies to your situation.
Related tools
Plan the rest of the loan
Compare lender quotes with the personal loan calculator, see a full payment table with the amortization calculator, model payoff timing with the debt payoff calculator, or print a contract with the loan agreement generator.