How much will the mortgage interest deduction save me in 2027?

Savings = interest paid × your marginal tax rate. Example: $28,000 interest in year 1 of a $400K loan at ~7% → $6,160 saved at 22%, $8,400 at 24%, $9,800 at 32%. But you only capture the value ABOVE the standard deduction — if your total itemized is $34,000 vs ~$30,000 standard, only the $4,000 excess generates real savings (~$880-1,280).

Can I deduct PMI, points, and HELOC interest in 2027?

PMI: deductible again starting 2026 under the new tax law (was expired 2022-2025) — worth $500-$1,500/yr for many buyers. Points: fully deductible in the year paid on purchase loans; amortized over the loan on refinances. HELOC/home equity interest: deductible ONLY if funds were used to buy, build, or substantially improve the home securing the loan — personal debt payoff makes it non-deductible.

Should I itemize or take the standard deduction in 2027?

Run the math: MFJ standard deduction ~$30,000+ in 2027. Itemize if mortgage interest + SALT (up to ~$40,800) + charitable gifts + medical (above 7.5% AGI) exceed that. New homeowners in year 1-3 of a 6.5%+ loan typically itemize ($20K-$30K interest alone). Older loans at 3-4% often produce less interest than the standard deduction provides.

TAX GUIDE — UPDATED OCTOBER 2026

Mortgage Interest Deduction 2027: Rules, Limits & What You Actually Save

Q: Is mortgage interest tax deductible in 2027?

Yes — mortgage interest remains deductible in 2027 on acquisition debt up to $750,000 ($375,000 married filing separately) for homes purchased after December 15, 2017. Loans originated before that keep the old $1,000,000 limit. You must itemize deductions to claim it — with the standard deduction at ~$30,000 (MFJ, inflation-adjusted), itemizing only wins when interest + SALT (capped ~$10K-$40K) + charity exceed the standard deduction.

Q: What is the SALT cap for 2027?

The SALT deduction cap stands at $40,000 for 2025 under the July 2025 tax law (up from $10,000), with scheduled increases of ~1% annually through 2029 before reverting to $10,000 in 2030 — unless Congress extends it. For 2027, the cap is expected around $40,800. High property-tax states (NJ, NY, CA, CT) benefit most, making itemizing worthwhile again for many homeowners.

PMI is deductible again, the SALT cap jumped to ~$40,800, and the $750K loan limit still applies. Here's the real math on whether your mortgage interest saves you thousands — or whether the standard deduction quietly wins.

$750K

Loan Limit (post-2017)

~$40,800

SALT Cap 2027 (est.)

PMI ✓

Deductible Again

~$30K+

Std. Deduction (MFJ)

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Mortgage-Info.com Editorial Team

Editorial & Research Team

October 30, 202614 minEditorial

Mortgage rates and market trendsFHA, VA, USDA and conventional loan programsRefinancing strategies

Quick Answer: Yes, But Only If You Itemize

Mortgage interest on acquisition debt up to $750K is deductible in 2027 — but only if itemizing beats the ~$30,000+ standard deduction. The 2025 tax law changed the game twice: PMI is deductible again (from 2026) and the SALT cap quadrupled to ~$40K. For most homeowners with 6%+ loans and property taxes above $10K, itemizing is back on the table. File with every deduction →

What's Deductible in 2027 (and What's Not)

Item	Deductible?	Limit / Condition
Mortgage interest (purchase loan)	YES	Debt ≤$750K ($1M pre-Dec 2017)
PMI / mortgage insurance	YES (back in 2026)	New law — was expired 2022-25
Points paid at purchase	YES	Fully in year paid
Points on refinance	YES (amortized)	Spread over loan life
Property taxes (SALT)	YES	Capped ~$40,800 with state taxes
HELOC interest	CONDITIONAL	Only if used to buy/build/improve the home
Second home interest	YES	Counts toward the same $750K
Investment property interest	Different rules	Deducted on Schedule E, not itemized

The Real Math: What Your Deduction Is Worth

Example: $400K Loan at 6.75% — Year 1 (Married Filing Jointly)

Mortgage interest paid$26,800

Property taxes (SALT)$9,500

PMI premiums$1,800

Charitable giving$2,000

Total itemized$40,100

Standard deduction (est. MFJ)~$30,500

Extra deduction vs standard$9,600 → ~$2,100-$3,070 real savings

Savings = excess itemized amount × marginal rate (22-32%). Year 1-5 homeowners capture the most — interest is front-loaded. File and capture it all →

Itemize or Standard Deduction? The 2027 Decision Grid

Situation	Verdict	Why
New loan $350K+ at 6.5%+	Itemize	Interest alone ~$22K-$30K/yr
High-tax state (NJ/NY/CA/CT)	Itemize	SALT cap ~$40,800 + interest clears $30K fast
Loan under $250K at 4%+	Likely standard	Interest $10-14K + SALT may not beat ~$30.5K
2019-2021 refi at ~3%	Standard	Low interest — deduction dead for you
Married, both incomes, charity givers	Itemize (often)	Charity + SALT + interest stack

E-File Your Taxes — Claim Every Deduction You Qualify For →

PMI Is Back + SALT Quadrupled

2027 Is the First Year Many Homeowners Itemize Again

Two rule changes stacked in your favor: PMI premiums deductible again AND the SALT cap up 4×. If you've been taking the standard deduction since 2018, re-run your numbers for tax year 2027.

E-File My Taxes →Compare Mortgage Rates →

IRS-approved e-file • Max deductions • Fast refund

HELOC & Home Equity Interest: The 2027 Rule Most People Get Wrong

HELOC interest is deductible only when funds improve the home securing the loan. The use test — not the loan type — decides:

✓ DEDUCTIBLE

• Kitchen/bath renovation
• Roof, HVAC, addition
• Home office build
• ADU construction

✗ NOT DEDUCTIBLE

• Credit card payoff
• Car purchase
• Tuition / medical bills
• Vacation / investments

Planning a renovation HELOC anyway? Compare HELOC lenders → Keep receipts — the IRS can ask for proof of use.

Frequently Asked Questions

Is mortgage interest tax deductible in 2027?

Yes — on acquisition debt up to $750K (post-2017 loans; $1M for older). Itemizing required. E-file and claim it →

How much will it save me?

Interest × marginal rate, but only the amount above the ~$30.5K standard deduction counts. Year-1 $400K/6.75% borrowers typically save $2,000-$3,000 real. Calculate yours when filing →

What is the SALT cap for 2027?

~$40,800 (the 2025 law raised the $10K cap to $40K with ~1% annual increases through 2029). Scheduled back to $10K in 2030 unless extended. File with max SALT →

Can I deduct PMI, points, and HELOC interest?

PMI: yes again from 2026. Points: purchase = year paid, refi = amortized. HELOC: only for home-improvement use. E-file my taxes →

Should I itemize or take the standard deduction?

Itemize if interest + SALT (≤~$40,800) + charity exceed ~$30,500 MFJ. New 6.5%+ loans almost always itemize; older low-rate loans usually don't. Compare rates →

Don't leave the deduction unclaimed. E-file with an IRS-approved provider and let the software max your itemization automatically.

E-File My Taxes →

Related Guides

Is a Home Equity Loan Tax Deductible in 2026?

SALT Deduction 2026: Cap & Mortgage Interest

Year-End Homeowner Tax Checklist

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Itemize. Claim PMI. Max SALT. File Once.

2027 is the year deductions came back — don't file like it's still 2018.

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