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.
The mortgage interest deduction lets homeowners deduct interest paid on qualified home mortgage debt as an itemized deduction. For mortgages taken out after December 15, 2017, the deduction applies to debt up to $750,000 ($375,000 for married filing separately). Mortgages originated before that date are grandfathered at the old $1 million limit.
The deduction covers interest on loans used to buy, build, or substantially improve a qualified home, which can be your primary residence or a second home. Home equity loan interest is deductible only if the funds were used to buy, build, or improve the home securing the loan.
Your mortgage lender sends you Form 1098 each January showing the interest you paid during the prior year. This deduction is one of the largest itemized deductions for many homeowners, but with the higher standard deduction, many taxpayers — especially those with smaller mortgages — find that the standard deduction exceeds their total itemized deductions.
How it works
The mortgage interest deduction lets itemizers deduct interest paid on debt used to buy, build, or substantially improve a qualified home. For mortgages originated after December 15, 2017, the deductible debt is capped at $750,000 ($375,000 if married filing separately); mortgages that existed before that date keep the older $1 million limit even if refinanced, as long as the refinanced balance does not exceed the original loan amount.
Your lender sends Form 1098 each January showing total interest paid during the prior year, and that figure — subject to the debt-limit cap if your mortgage balance exceeds the threshold — goes on Schedule A alongside your other itemized deductions. The deduction covers your primary residence and one additional second home, but not investment or rental properties, which use different rules under Schedule E instead.
Home equity loan or HELOC interest is deductible only if the borrowed funds were actually used to buy, build, or improve the home securing the loan — interest on a home equity loan used to pay off credit cards or fund a vacation is not deductible, even though it was before the 2017 tax law changes. Because the standard deduction is now much higher, many homeowners — particularly those with smaller mortgage balances — find their total itemized deductions, including mortgage interest, no longer exceed the standard deduction, making the mortgage interest deduction irrelevant to their actual tax bill.
Example: mortgage interest under the debt limit
A homeowner takes out a $600,000 mortgage in 2025 to buy their primary residence and pays $28,000 in mortgage interest during the year, all reported on Form 1098. Because $600,000 is below the $750,000 debt limit for post-2017 mortgages, the entire $28,000 in interest is eligible for the deduction, assuming the homeowner itemizes rather than taking the standard deduction.
If the same homeowner instead had a $900,000 mortgage, only the interest attributable to the first $750,000 of debt would be deductible — the portion of interest tied to the $150,000 above the cap is not deductible.
Frequently asked questions
What is the mortgage debt limit for the interest deduction?
Is home equity loan interest deductible?
Should I itemize just for the mortgage interest deduction?
Related Terms
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.
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).
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.