Mortgage Interest Deduction Calculator

Which Loans Count and the Limits for 2026

Interest is deductible as home mortgage interest when the loan is secured by your main home or one second home and the money was used to buy, build or substantially improve that home (home acquisition debt). Under IRC 163(h)(3)(F), now permanent under P.L. 119-21:

A refinance keeps the older loan’s date and limit up to the balance refinanced; extra cash taken out is new debt. Interest on a home equity loan or HELOC is deductible only to the extent the money buys, builds or substantially improves the home that secures it. Mortgage insurance premiums (private PMI and government-loan mortgage insurance on contracts issued after 2006) are again treated as deductible interest starting in 2026, reduced by 10% for each $1,000 of AGI over $100,000 ($500 over $50,000 if married filing separately) and gone above $109,000 ($54,500).

How the Deduction Is Figured: Publication 936 Table 1

If all your home loans together are under the limit, every dollar of interest on them is deductible and you can skip the worksheet. If not, Table 1 prorates:

1. Lines 1 to 6: start with older debt. The qualified limit is the smaller of (the larger of grandfathered debt and $1,000,000) and (grandfathered + 1987-2017 debt).
2. Lines 7 to 11: if you also have post-2017 debt and the line 6 amount is under $750,000, the limit becomes the smaller of (the larger of line 6 and $750,000) and (line 6 + post-2017 debt).
3. Line 12: the average balance of all the home loans.
4. Lines 14 and 15: deductible interest = interest paid × (limit ÷ total balance), with the fraction rounded to three decimals.

Example: a $1.1 million jumbo loan taken out in 2024, $77,000 of interest. Limit $750,000; $750,000 ÷ $1,100,000 = 0.682; deductible interest = $77,000 × 0.682 = $52,514. The other $24,486 is personal interest and not deductible. Use average balances, not year-end ones: Pub. 936 allows the lender’s average, the average of the first and last balance, or interest paid divided by the rate.

Itemize or Take the Standard Deduction?

Mortgage interest only helps if your itemized deductions (mortgage interest, state and local taxes up to the SALT cap, charity, medical costs over 7.5% of AGI) exceed the 2026 standard deduction: $32,200 married filing jointly, $24,150 head of household, $16,100 single or married filing separately (Rev. Proc. 2025-32), plus $1,650 per spouse ($2,050 if unmarried) at 65 or older. The tax saved is the extra deduction above the standard amount times your bracket, not the whole interest bill.

In this example a $250,000 loan does not clear the joint standard deduction, and the FHA borrower’s $3,000 of premiums is cut to $1,500 because AGI is $4,500 over $100,000. The pre-2018 $900,000 loan is fully deductible because it falls under the old $1 million limit; the same loan taken out today would be prorated.

Common Mistakes With the Mortgage Interest Deduction

• Deducting HELOC interest spent on a car, tuition or debt payoff. Only proceeds used to buy, build or substantially improve the home qualify, whatever the lender calls the loan.
• Treating a cash-out refinance as all old debt. Only the balance refinanced keeps the pre-2018 limit; the cash out is new debt, and acquisition debt only if spent on the home.
• Using the year-end balance. Table 1 uses average balances for the year.
• Counting the whole interest bill as savings. If the standard deduction is $32,200 and your itemized total is $44,000, only $11,800 of extra deduction saves tax.
• Deducting a third home. Only a main home and one second home qualify; a rental is reported on Schedule E instead.
• Forgetting points. Points on a purchase loan are usually deductible in the year paid; points on a refinance are spread over the loan term.

What the Calculator Does Not Cover

It does not deduct points, separate mixed-use loans into acquisition and home-equity parts, split interest between a home and business or rental use, apply the 2026 limit on itemized deductions for taxpayers in the 37% bracket, or compute state taxes. It treats the SALT amount you enter as already capped (the SALT deduction calculator figures the 2026 cap). If you have several loans of different ages, refinanced balances or a home used partly for business, a CPA or enrolled agent can complete Table 1 with your lender statements.

Frequently Asked Questions

How to Use This Calculator

1. Enter your loan balances by date — the average balance for the year of loans taken after December 15, 2017, between October 14, 1987 and December 15, 2017, and before October 14, 1987.
2. Enter the interest paid — from box 1 of Form 1098 for the loans entered; add mortgage insurance premiums separately.
3. Enter AGI and other itemized deductions — adjusted gross income (Form 1040 line 11), state and local taxes after the SALT cap, and charity or medical deductions.
4. Pick your filing status — it sets the debt limits and the 2026 standard deduction.
5. Read the results — the qualified loan limit, the share and amount of interest deductible, itemized total versus standard deduction, and the federal tax saved.