One of the first tax questions new homeowners ask is simple: “Can I write off my mortgage interest?” The short answer is yes — mortgage interest is tax deductible. The longer, more useful answer is that it only helps if you itemize, and with today’s high standard deduction, many first-time buyers are surprised to learn it may not save them anything at all. This guide breaks down exactly how the mortgage interest deduction works in 2026, when it beats the standard deduction, how to claim it, and the related write-offs that often make itemizing worthwhile.
What is the mortgage interest deduction?
The mortgage interest deduction lets you subtract the interest you pay on a home loan from your taxable income. Because a mortgage is heavily front-loaded with interest — in the early years, the vast majority of each payment is interest, not principal — this deduction is at its most valuable in exactly the years you’re a new buyer.
Say your loan is $300,000 at around 6.5%. In year one you might pay roughly $19,000 in interest. That’s a meaningful number, and it’s the figure at the center of this deduction.
The $750,000 limit
You can deduct the interest on up to $750,000 of mortgage debt used to buy, build, or substantially improve your main home (or a second home). If your loan is larger than that, only the interest on the first $750,000 counts. Loans taken out before late 2017 are grandfathered at a higher $1 million limit. For the overwhelming majority of first-time buyers, the entire loan falls under the cap, so all of the interest qualifies.
The catch: you have to itemize
This is the part that catches new buyers off guard. When you file taxes, you choose the larger of two options:
- The standard deduction — a flat amount everyone can take (roughly $15,000 for single filers and $30,000 for married couples filing jointly in recent years; check the current figure).
- Itemized deductions — the sum of specific write-offs, including mortgage interest, state and local taxes, and charitable gifts.
You only benefit from the mortgage interest deduction if your total itemized deductions exceed the standard deduction. If they don’t, you take the standard deduction and your mortgage interest effectively doesn’t lower your taxes — which is fine, it just means the standard deduction is already giving you a bigger break.
A worked example
Imagine a married couple filing jointly with:
- $19,000 in mortgage interest
- $8,000 in state and local taxes (property + income)
- $2,000 in charitable donations
That’s $29,000 in itemized deductions. If the standard deduction is $30,000, they’re better off taking the standard deduction, and the mortgage interest didn’t add anything this year. But add slightly more interest (a bigger loan or higher rate), a larger property-tax bill, or more charitable giving, and itemizing wins — sometimes by thousands. It’s genuinely a year-by-year math problem, and it often flips in your favor in the early, interest-heavy years of the loan.
What else can you itemize as a homeowner?
The mortgage interest deduction rarely stands alone. When you itemize, you can often stack it with:
- State and local taxes (SALT): Property taxes plus state income or sales taxes, subject to the SALT cap.
- Discount points: If you paid points to lower your rate at closing, they’re often deductible — sometimes fully in the year you buy, sometimes spread over the loan.
- Charitable contributions and certain other deductions.
Adding these to your mortgage interest is often exactly what pushes a first-time buyer over the standard-deduction threshold.
How this interacts with a Mortgage Credit Certificate
If you have a Mortgage Credit Certificate (MCC), you get the best of both worlds. The MCC turns part of your interest into a direct tax credit (more powerful than a deduction), and you can still deduct the remaining interest if you itemize. For buyers who take the standard deduction, the MCC is especially valuable because you get the credit whether or not you itemize.
How to claim the mortgage interest deduction
- In January, your lender sends Form 1098 showing the interest you paid last year.
- Add up all your potential itemized deductions and compare the total to the standard deduction.
- If itemizing wins, report your mortgage interest on Schedule A of your tax return.
- Keep your 1098 and closing documents; points and prepaid interest may be listed on your settlement statement.
- Save records of home improvements too — they don’t affect this deduction, but they can reduce capital gains taxes when you sell.
Common mistakes to avoid
- Assuming you’ll automatically save on taxes. Many first-time buyers won’t itemize at all, and that’s perfectly fine.
- Forgetting points. Discount points paid at closing are easy to overlook and can be deductible.
- Deducting the whole payment. Only the interest portion is deductible — not principal, insurance, or escrow.
- Ignoring the MCC. If your state offers one, it may beat the deduction outright and applies even if you take the standard deduction.
- Overlooking property taxes. They count toward itemizing too, within the SALT cap.
Frequently asked questions
Is mortgage interest still deductible in 2026?
Yes, on up to $750,000 of home-acquisition debt, if you itemize. The deduction itself hasn’t gone away; the high standard deduction just means fewer people benefit from it.
Should I itemize or take the standard deduction?
Take whichever is larger. Add up your mortgage interest, property and state taxes, points, and charitable gifts; if that total beats the standard deduction, itemize.
Can I deduct mortgage insurance (PMI)?
PMI deductibility has come and gone with expiring tax provisions, so check the current year’s rules. Note that a larger down payment or an MCC strategy can help you avoid PMI in the first place.
Do I need to itemize to benefit from buying a home?
No. Even if you take the standard deduction, homeownership can pay off through building equity, a possible MCC, and long-term appreciation.
Is interest on a refinance or second home deductible?
Generally yes, within the same $750,000 total limit, as long as the debt is secured by a qualified home. Cash-out refinance proceeds used for non-home purposes may not qualify.
The bottom line
Mortgage interest is deductible, and it’s most valuable in your early years as a buyer — but only if your itemized deductions beat the standard deduction. Run the comparison each year, don’t forget to stack property taxes and points, and ask your lender about an MCC for a benefit you can claim even without itemizing. When in doubt, a quick check with a tax professional will tell you exactly which path saves you more. You can also estimate your costs first with our home buying calculators.