Mortgage Interest Deduction 2026: How Much Can You Save on Taxes?
Homeowners can deduct mortgage interest on up to $750,000 of debt — saving $3,000-$10,000+ in federal taxes per year. Here's exactly how much you'll save based on your mortgage size and tax bracket.
Debt Limit
$750,000
Avg Tax Savings
$3K-$10K/yr
Std Deduction (MFJ)
$31,400
SALT Cap
$10,000
How Much Will You Save? (By Mortgage Size & Tax Bracket)
| Mortgage at 6.5% | Interest Yr 1 | 22% Bracket | 24% Bracket | 32% Bracket | 35% Bracket |
|---|---|---|---|---|---|
| $250,000 | $16,125 | $3,548 | $3,870 | $5,160 | $5,644 |
| $350,000 | $22,575 | $4,967 | $5,418 | $7,224 | $7,901 |
| $500,000 | $32,250 | $7,095 | $7,740 | $10,320 | $11,288 |
| $750,000 | $48,375 | $10,643 | $11,610 | $15,480 | $16,931 |
*Tax savings = Interest paid × Tax bracket rate. You must itemize to claim. Savings decrease each year as more payment goes to principal. File your taxes and claim the deduction.
Should You Itemize or Take the Standard Deduction?
Key Rule: You can ONLY claim the mortgage interest deduction if you itemize. In 2026, the standard deduction is $15,700 (single) or $31,400 (married filing jointly). Itemize only if your total deductions exceed these amounts.
Example: Married Couple, $400K Mortgage at 6.5%
What Mortgage Costs Are Tax Deductible?
✅ Deductible
- ✅ Mortgage interest (up to $750K debt)
- ✅ Mortgage points paid at closing
- ✅ PMI premiums (if AGI under $109K, check current rules)
- ✅ Property taxes (up to $10K SALT cap)
- ✅ HELOC interest (if used for home improvement)
- ✅ Home equity loan interest (if used for home improvement)
- ✅ Late payment charges (treated as interest)
❌ NOT Deductible
- ❌ Principal payments
- ❌ Homeowner's insurance
- ❌ HOA fees
- ❌ Home repairs (unless home office)
- ❌ Title insurance
- ❌ Appraisal fees
- ❌ HELOC interest for non-home purposes
Lower Your Rate = More Interest = Bigger Deduction
If you refinance to a lower rate on a larger loan, you may increase your deductible interest. Compare refinance rates to see if it makes sense.
Compare Refi Rates (Soft Pull) →Special Situations
HELOC Interest Deductibility
HELOC interest is ONLY deductible if funds are used to "buy, build, or substantially improve" your home. Using HELOC for debt consolidation, car purchase, or vacation = NOT deductible. Keep receipts to prove home improvement use.
Mortgage Points Deduction
Points paid at closing (1 point = 1% of loan) are fully deductible in the year paid if: it's a purchase (not refi), points are typical for your area, and you paid them with your own funds. Refinance points must be amortized over the loan term.
Second Home Deduction
You can deduct interest on a second home (vacation home) as long as the combined mortgage debt on both homes doesn't exceed $750K. The home must be used personally for at least 14 days/year or 10% of rental days.
Rental Property
Rental property mortgage interest is deducted on Schedule E as a business expense — not limited by the $750K cap. This is separate from the personal mortgage interest deduction.
Frequently Asked Questions
How much mortgage interest can I deduct in 2026?
Interest on up to $750K of debt ($375K married filing separately). On a $400K mortgage at 6.5%: ~$25,800/year deductible.
Is mortgage interest still deductible?
Yes, if you itemize on Schedule A. Standard deduction is $15,700 (single) or $31,400 (MFJ) for 2026.
Should I itemize or take standard deduction?
Itemize if mortgage interest + SALT ($10K cap) + charity exceeds $15,700 (single) or $31,400 (married).
Can I deduct HELOC interest?
Only if HELOC funds are used for home improvement. Not deductible if used for debt consolidation or other purposes.
What about PMI deduction?
PMI is deductible for AGI under $109K. Check IRS guidance for 2026 — this provision has been extended/expired multiple times.
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Emily Chen
Construction & Home Equity Specialist · NMLS #345678
Emily helps homeowners understand the tax implications of different mortgage products. She works closely with CPAs to ensure her clients maximize every deduction available.