Is Mortgage Interest Tax Deductible? IRS Rules for 2026

Acquisition indebtedness is debt used to buy, build, or substantially improve a qualified home and secured by that home.

For loans originated after December 15, 2017, the deductible interest limit applies to a maximum of $750,000 in acquisition debt ($375,000 for married filing separately).

For loans originated on or before December 15, 2017, the older $1,000,000 limit ($500,000 MFS) continues to apply.

If your acquisition debt exceeds the applicable limit, only a proportionate share of the interest qualifies. Refinanced loans generally retain the origination date of the original loan for limit purposes, subject to specific rules.^[1]

Qualifying mortgage interest may be claimed on your primary residence and one second home.

A second home qualifies as long as you do not rent it out, or if you do rent it, you personally use it for more than 14 days or 10 percent of the days it is rented, whichever is greater.

A second home can be a house, condominium, cooperative, mobile home, house trailer, or boat—if it has sleeping, cooking, and toilet facilities.

Before purchasing a second property, reviewing the how much house you can afford guide can help set realistic borrowing targets.

Prior to the Tax Cuts and Jobs Act of 2017, interest on home equity debt was deductible regardless of how the funds were used, up to $100,000.

For the 2025 tax year, interest on a home equity loan or HELOC is deductible only if the loan proceeds were used to buy, build, or substantially improve the qualified home that secures the loan.

Funds used for qualifying home improvements tax deductible work—such as a new roof, HVAC replacement, or addition—retain interest deductibility; funds used for personal expenses such as vacations, car purchases, or debt consolidation do not.

Taxpayers must be able to document the use of home equity funds to support the deduction.

Points (also called loan origination fees or discount points) paid to obtain a mortgage on your main home are generally deductible as mortgage interest in the year paid, if they meet specific IRS criteria.

Points paid on a refinance must generally be deducted over the life of the loan rather than in the year paid.

IRS Publication 936 provides detailed rules for points deductibility.

For a comprehensive look at all costs paid at settlement, see our guide on whether closing costs are tax deductible.

Mortgage lenders are required to send borrowers Form 1098 (Mortgage Interest Statement) by January 31 each year, reporting the total mortgage interest paid during the previous year.

Form 1098 also reports points paid and mortgage insurance premiums.

Use this form to accurately complete Schedule A—the amounts on Form 1098 should match what you report, and discrepancies may trigger IRS inquiries.

For the 2025 tax year, married couples filing jointly need total itemized deductions exceeding $30,000 to benefit from itemizing.

Single filers need to exceed $15,000.

Taxpayers most likely to benefit from the mortgage interest deduction include: early-stage homeowners with large loan balances and high interest payments; homeowners in high-tax states where the state and local tax (SALT) deduction, capped at $10,000, contributes significantly to itemized deductions; and those with large charitable contributions, significant deducting medical costs, or multiple qualifying deductions that combine with mortgage interest to exceed the standard deduction.

Homeowners in HOA communities may also add HOA fees tax deductible on rental portions to their itemized total.

To determine whether itemizing is beneficial, add up your anticipated Schedule A deductions: qualifying mortgage interest + SALT (capped at $10,000) + charitable contributions + medical expenses above 7.5% AGI.

If the total exceeds your standard deduction, itemizing provides a tax benefit.

If not, the standard deduction remains optimal even if you paid substantial mortgage interest during the year.

Understanding your average mortgage payment breakdown—principal vs. interest—helps estimate how much interest is actually deductible each year.

The Alternative Minimum Tax (AMT) may limit the benefit of certain deductions for higher-income taxpayers.

Home mortgage interest on acquisition debt is generally still deductible for AMT purposes, but SALT deductions are eliminated under AMT.

Taxpayers subject to AMT should consult a tax professional about the net effect on their mortgage interest deduction benefit.

Qualifying interest includes: interest on your first mortgage on a primary residence; interest on a second mortgage or home equity loan used to buy, build, or substantially improve your home; interest on a HELOC used for qualifying home improvements tax deductible under IRS rules; mortgage points meeting IRS criteria (see Publication 936); and late payment charges that are not for a specific service.

Non-qualifying items include: interest on home equity debt used for purposes other than buying, building, or improving the home; interest on investment property mortgages (deducted differently, on Schedule E); interest on loans not secured by a qualified residence; mortgage insurance premiums (treatment varies by tax year—verify current deductibility status with IRS.gov); and principal payments, which are never deductible.

Note that car loan interest tax deductible rules are separate and generally non-deductible for personal use.

Report qualifying home mortgage interest from Form 1098 on Schedule A, Line 8a (home mortgage interest and points reported on Form 1098).

If you paid mortgage interest to a lender who did not send a Form 1098 (a seller-financed purchase or individual lender), report that on Line 8b along with the lender's identifying information.

Points paid on a home purchase may appear on Form 1098 and are reported on Line 8a or 8c depending on circumstances.^[3]

If your mortgage balance exceeds the $750,000 (or $1,000,000 for older loans) deductibility limit, you must calculate the deductible portion.

IRS Publication 936 contains the worksheet for computing deductible interest when your debt exceeds the applicable limit.

A tax professional or tax software can help with this calculation.

For context on how loans amortize over time, our mortgage amortization guide shows how the interest-to-principal ratio shifts year by year.

Retain all Forms 1098 received from mortgage lenders.

Also keep closing disclosure documents from your home purchase (which show points paid and initial interest), and documentation of any home equity loan or HELOC uses—particularly if you used the funds for home improvements tax deductible under IRS rules—since this affects deductibility.

The IRS recommends keeping home-related tax records as long as you own the property and for at least 3 years after filing the return for the year of sale.