What is mortgage interest?
Mortgage interest is essentially the cost of borrowing money to buy a house. Lenders charge interest as a percentage of the principal, which is the amount borrowed. The interest rate is part of the annual percentage rate (APR), which includes other fees from the lender.
Mortgage interest rates vary by loan type and lender. They also vary based on your credit score, down payment amount and debt-to-income (DTI) ratio.
What is the mortgage interest deduction?
A tax deduction is a claim on your tax return that reduces your taxable income. Your tax liability, or the amount of taxes you owe, is calculated based on taxable income. Essentially, the lower this amount is, the lower your tax liability.
You can only claim the mortgage interest deduction if you itemize your deductions.
You can deduct mortgage interest as long as certain conditions are met. The amount you can deduct is based on the date of your mortgage, the mortgage amount and how you use the mortgage funds.
For instance, you can only claim the mortgage interest deduction if the funds were used to buy, build or substantially improve the home. Also, you can only claim the deduction if you itemize your deductions.
Itemizing deductions vs. standard deduction
Generally, you should only itemize deductions if the itemized amount is more than the standard deduction amount. Most homeowners claim the standard deduction, according to the Internal Revenue Service (IRS).
The table below shows the standard deduction amounts for the 2025 and 2026 tax years.
| Filing status | 2025 standard deduction | 2026 standard deduction |
|---|---|---|
| Single or married filing separately | $15,750 | $16,100 |
| Married couples filing jointly | $31,500 | $32,200 |
| Heads of household | $23,625 | $24,150 |
» MORE: The tax benefits of owning a home: must-know deductions and secrets
Mortgage interest deduction limits
You can deduct the full amount of your mortgage interest if your mortgage balance is $750,000 or less, though this amount drops to $375,000 if you’re married and filing separately. If you took out a home loan before Dec. 16, 2017, you can deduct up to $1 million, or $500,000 if married and filing separately.
How much you can deduct depends on the mortgage date, amount and funds purpose.
Other rules apply for the mortgage interest deduction. The home secured by the loan has to be your primary or secondary home, or what’s known as a qualified home, according to the IRS.
If you rent out the second home, you have to use it for more than 14 days or more than 10% of the number of days out of the year the home is rented, whichever is longer.
How to claim the mortgage interest tax deduction
To claim the mortgage interest tax deduction, take the following steps:
1. Get your mortgage interest statement
First, you’ll need Form 1098, known as the Mortgage Interest Statement form. This form shows the lender’s information, your information, the property address, the amount of mortgage interest you paid over the tax year, the amount of principal left and more.
Your mortgage lender will provide Form 1098 to you either electronically or by mail. You’ll then use this form when itemizing your deductions on your tax return.
2. Fill out Schedule A
To deduct mortgage interest, you’ll need to use Schedule A for itemized deductions. In the “Interest You Paid” section, fill out line 8a for the home mortgage interest reported to you on Form 1098. If you paid additional mortgage interest not reported on Form 1098, you can enter the amount on line 8b.
Add up your itemized deductions and add the total on line 17. If you choose to itemize deductions even though they were less than the standard deduction, make sure to check the box on line 18.
3. Attach Schedule A to Form 1040
Next, you’ll attach Schedule A to Form 1040, or the U.S. Individual Income Tax Return form.
» MORE: How to file taxes
FAQ
Is mortgage interest 100% deductible?
Mortgage interest is 100% deductible up to the limits set by the IRS. That means the full amount is deductible up to $750,000 for most filers, or $375,000 if married and filing separately.
Is it worth claiming mortgage interest?
It can be worth claiming mortgage interest if your total amount of itemized deductions is greater than the standard deduction for the current tax year. However, for most taxpayers, the standard deduction is greater than their itemized deductions.
How do you deduct mortgage interest with a home office?
You should be able to deduct mortgage interest if you have a home office, though you’ll need to follow specific rules for doing so. If you itemize your deductions, you’ll need to allocate your home office space and calculate your deduction for your personal use of the property.
For more information on how to deduct interest properly with a home office, refer to the instructions listed in Publication 587, Business Use of Your Home or contact a tax professional for personalized advice.
How do you deduct mortgage interest for a rental home?
You may be able to deduct mortgage interest for a primary home or a second home you rent out if certain qualifications are met. If you rent out part of your primary home, the rented part must be the tenant’s primary residence, not a self-contained unit and limited to no more than two tenants (not counting their dependents, if applicable). For a second home, you must live in the home for more than 14 days or 10% of the rented days per year.
Note that different qualifications may apply depending on the type of rental. If you have a rental home or rent part of your home, it’s best to consult a tax professional.
Is home equity loan interest tax deductible?
Home equity loan interest is only tax deductible if you use the loan to buy, build or substantially improve the home.
Bottom line
While you can deduct mortgage interest on your tax return, your total itemized deduction amount might not be significant enough to justify itemizing over taking the standard deduction. Most taxpayers claim the standard deduction on their taxes rather than itemize deductions. It’s best to consult a tax professional or use tax preparation software to help you decide whether it’s more beneficial to itemize deductions or to take the standard deduction.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Internal Revenue Service, “Publication 936 (2025), Home Mortgage Interest Deduction.” Accessed Jan. 26, 2026.
- Internal Revenue Service, “About Form 1040, U.S. Individual Income Tax Return.” Accessed Jan. 26, 2026.
- Internal Revenue Service, “About Schedule A (Form 1040), Itemized Deductions.” Accessed Jan. 26, 2026.
- Internal Revenue Service, “About Form 1098, Mortgage Interest Statement.” Accessed Jan. 26, 2026.
- Internal Revenue Service, “IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill.” Accessed Jan. 26, 2026.
- Internal Revenue Service, “About Publication 587, Business Use of Your Home (Including Use by Daycare Providers).” Accessed Jan. 26, 2026.
