Mortgage Interest Deduction
An itemized deduction for interest paid on home mortgage debt up to $750,000, covering your primary residence and one second home. It is one of the largest potential itemized deductions for homeowners.
The mortgage interest deduction allows homeowners to deduct interest paid on qualified home acquisition debt as an itemized deduction on Schedule A. For mortgages originated after December 15, 2017, the deduction applies to combined loan balances up to $750,000 ($375,000 for married filing separately). Mortgages originated before that date are grandfathered at the prior $1,000,000 limit.
Qualified home acquisition debt is a mortgage used to buy, build, or substantially improve a qualified home — your primary residence or one second home. Home equity loan interest is deductible only if the loan proceeds were used to buy, build, or improve the home securing the debt; home equity loans used for personal expenses (vacations, car purchases, debt consolidation) no longer qualify under current law.
Your mortgage servicer sends Form 1098 by January 31 showing the total interest paid in the prior year. Points paid on a new home purchase are generally fully deductible in the year paid; points paid on a refinance must be amortized over the life of the loan. With the higher standard deduction, this deduction is most beneficial for higher-balance mortgages, homeowners with multiple deductible expenses that together exceed the standard deduction, or those in high-tax states.
How it works
The mortgage interest deduction lets homeowners who itemize deduct interest paid on qualified home acquisition debt on Schedule A. For mortgages taken out after December 15, 2017, the deduction covers interest on combined loan balances up to $750,000 ($375,000 if married filing separately); mortgages from before that date are grandfathered at the older, higher $1,000,000 limit.
Your mortgage servicer sends you Form 1098 by January 31 showing the total interest you paid the prior year, which is the figure you use on Schedule A. Points paid when purchasing a home are generally fully deductible in the year you pay them, while points paid on a refinance have to be amortized — deducted gradually — over the life of the new loan rather than all at once.
The deduction only covers acquisition debt used to buy, build, or substantially improve your primary residence or one second home; home equity loan interest is deductible only when the loan proceeds were actually used to buy, build, or improve the home securing the debt, not for unrelated spending like a vacation, car purchase, or debt consolidation. With today's higher standard deduction, this deduction mainly pays off for people with larger mortgage balances or enough other itemized deductions — combined with, and limited alongside, the SALT cap — to clear the standard deduction threshold.
Example: deducting interest above the $750,000 limit
A couple has a $900,000 mortgage originated in 2022, well after the December 15, 2017 cutoff, and pays $40,000 in mortgage interest for the year. Because the loan balance exceeds the $750,000 limit for post-2017 mortgages, they can't deduct all of it.
Only the interest attributable to the first $750,000 of the balance is deductible: $750,000 divided by $900,000 is about 83.3%, so roughly 83.3% of the $40,000 paid — about $33,333 — is deductible, with the rest attributable to the excess balance above the limit.
Frequently asked questions
What is the mortgage interest deduction limit?
Can I deduct interest on a home equity loan?
Where do I get the mortgage interest figure for my tax return?
Related Terms
Mortgage Interest Deduction
An itemized deduction for interest paid on mortgage debt up to $750,000 ($375,000 if married filing separately) used to buy, build, or improve your primary or second home.
Itemized Deduction
Specific expenses you can deduct instead of taking the standard deduction, including mortgage interest, state/local taxes (SALT cap: $40,000 for 2025+ under OBBBA, phased out for high earners), charitable donations, and medical expenses.
SALT Deduction
An itemized deduction for state and local taxes paid, including income tax (or sales tax) and property tax. Under OBBBA (2025+), capped at $40,000 per return ($20,000 MFS) with phaseout above $500,000 MAGI to a $10,000 floor. Pre-OBBBA (2018–2024) the cap was $10,000 flat.
Standard Deduction
A fixed dollar amount that reduces your taxable income, available to all filers who do not itemize. For 2025, it is $15,750 for single filers and $31,500 for married filing jointly (OBBBA-adjusted).