Mortgage Interest Deduction

Quick Takeaways

The value of the mortgage interest deduction depends on the amount of your mortgage, your interest rate, how far along you are in paying off your mortgage, and your tax bracket
The deduction can help homeowners reduce their taxes and thus make owning a home more affordable
You must itemize your deductions on your tax return in order to claim it

Mortgage Interest Deductions Provisions From the 2017 Federal Tax Legislation

Check out the Tax Cuts and Jobs Act - What it Means for Homeowners and Real Estate Professionals page for information on the major provisions affecting current and prospective homeowners, commercial real estate, and real estate professionals.

What Are the Limits on Mortgage Tax Interest Deductions?

The Tax Cuts and Jobs Act reduced the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/15/2017. Loans originating on or before this date of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.
Homeowners may refinance mortgage debts existing on 12/15/2017 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
The Act repealed the deduction for interest paid on home equity debt through 12/31/2025. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.

See References for more information.

Mortgage Interest Deduction Topics

References

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.

Mortgage Interest Deduction allows homeowners to reduce their taxable income by deducting the amount paid in mortgage interest. Learn how it can benefit housing and homeownership, check out the IRS rules and guidelines, download ebooks explaining the law, and find out why there is opposition to it.

Mortgage Interest Deduction Basics

How To Maximize Mortgage Interest Deduction When Filing Taxes (MPAMag, Mar. 17, 2025)

“The mortgage interest deduction is a tax incentive for homeowners on the mortgage interest paid on the first $1 million of mortgage debt. Homeowners can deduct interest on the first $750,000 of the mortgage if they purchased their homes after December 15, 2017.”

How to Claim the Mortgage Interest Deduction on Your Taxes (CNBC, Jan. 28, 2026)

“The mortgage interest deduction allows you to deduct a portion of the interest on a mortgage for a primary or secondary home. You’ll have to file an itemized return to claim the deduction and the loan must be a secured debt with your property as collateral. In addition to private mortgages, the MID can be claimed on government-backed mortgages — like USDA, VA and FHA loans — and on interest on a refinanced mortgage.You can also deduct mortgage points, prepayment penalties and late fees. If you want to claim the deduction for a home equity loan or HELOC, the funds must have been used to “buy, build, or substantially improve” the property.”

The maximum deduction includes the total amount of loans on your primary and secondary residences.”

Mortgage Interest Deduction: What It Is and What Qualifies (Bankrate, Aug. 15, 2025)

Generally, you claim the mortgage interest tax deduction in the year the interest was accrued. For some costs, such as mortgage points, you can stretch out the deduction over the life of the mortgage.

While almost all homeowners qualify for the mortgage interest tax deduction, you can only claim it if you itemize your deductions on your federal income tax return by filing a Schedule A with your Form 1040 or an equivalent form.

Consumer Guide: Mortgage Interest Tax Deduction (National Association of REALTORS®))

“For many homeowners, the mortgage interest deduction can offer meaningful tax savings. If you're navigating tax season or planning to buy a home, understanding how this deduction works can help you make smarter financial decisions.”

How Does the Mortgage Interest Deduction Benefit Housing and Homeownership?

These Are the Tax Breaks You Can Get When You Buy a House (U.S. News & World Report, Jul. 2, 2024)

Mortgage interest deduction. This is a deduction for interest paid on mortgage debt, but you will need to itemize your deductions to qualify for this tax break. “Under current law, this applies to loans up to $750,000,” Rubinstein says.

Mortgage Interest Deductions? Not a Bad Idea After All (Journal of Monetary Economics, Jan. 9, 2024)

Thus, removing homeownership subsidies is likely to be substantially more harmful in these areas, both in the aggregate and for low-income renters in particular. Further, rents in communities across the United States have grown more quickly than incomes over the past two decades, leading to a large increase in the share of cost-burdened renters (Whitney, 2023). If this trend continues, eliminating homeownership subsidies would be even more harmful in the future.

Why Homeownership Should Continue to Be Incentivized by Our Federal Tax Systempdf (Rosen Consulting Group/National Association of REALTORS®, Feb. 2020)

As homeowners build equity the increased wealth leads to greater consumer spending that spurs business activity and provides a positive multiplier effect that creates jobs and income throughout the economy. Every 10% increase in total housing market wealth would translate to approximately $147 billion in additional consumer spending, or 0.8% of GDP, as well as billions of dollars in new federal tax revenue.

Why Is There Opposition to the Mortgage Interest Deduction?

A Tax Break to Encourage Homeownership Primarily Helps the Wealthy (Marketplace, Jun. 3, 2024)

Still, the vast majority of people don’t benefit from the mortgage interest deduction, and many economists argue there’s not much evidence that the mortgage interest deduction encourages more people to buy homes instead of renting. Instead, there’s evidence it drives up home prices or incentivizes bigger homes.

The Home Mortgage Interest Deduction Reinforces Racial Disparities (Tax Policy Center, Apr. 2, 2024)

We estimate that after the passage of the 2017 Tax Cuts and Jobs Act (TCJA), the average tax benefit of the HMID was $199 across all White families (including those who did not claim it or file a tax return) in 2019. In contrast, the benefit was, on average, $88 for Black families and $66 for Hispanic families. Overall, Black and Hispanic families received just 54 percent and 38 percent, respectively, of the average benefit for all families. White families got 21 percent more than the average.

Who Benefits from Mortgage Interest Deduction and Who Missed Out? (ax Policy Center, Jun. 6, 2025)

“Given the mortgage interest deduction’s disproportionate benefits for higher-income homeowners and its relatively high cost, policymakers have better opportunities to make housing more affordable for all Americans.”

Rules, Forms, & Guidelines from the IRS on Mortgage Interest Tax Deduction

Can I Deduct My Mortgage-Related Expenses? (Internal Revenue Service, Sep. 5, 2025)

“This interview will help you determine if you're able to deduct amounts you paid for mortgage interest, points, mortgage insurance premiums, and other mortgage-related expenses.”

Home Mortgage Interest Deduction—Publication 936pdf (Internal Revenue Service, Apr. 30, 2026)

“This publication discusses the rules for deducting home mortgage interest.”

eBooks & Other Resources

eBooks.realtor.org

The following eBooks and digital audiobooks are available to NAR members:

The Complete Idiot's Guide to Mortgages (eBook)

The Everything Guide to Mortgages Book (eBook)

Mortgage Confidential (eBook)

Mortgage Myths (eBook)

Mortgage Rip-offs and Money Savers (eBook)

Mortgages 101 (eBook)

Mortgages For Dummies® (eBook)

How to Invest in Real Estate & Pay Little or No Taxes (eBook)

The Home Mortgage Book (eBook)

The Mortgage Answer Book: Practical Answers to More Than 150 of Your Mortgage and Loan Questions (eBook)

The Mortgage Encyclopedia: The Authoritative Guide to Mortgage Programs, Practices, Prices and Pitfalls (eBook)

Mortgage Management for Dummies (Audiobook)

The Tax Lady's Guide to Beating the IRS and Saving Big Bucks on Your Taxes (eBook)

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The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.

Advocacy

What is the fundamental issue?

Individuals are permitted to deduct interest paid on mortgage debt of up to $750,000. If the mortgage was taken out prior to December 16, 2017, and otherwise qualifies, the maximum amount is $1 million. The deduction is available for interest on mortgages for a principal residence and one additional residence. The $750,000 (or $1 million) limitation represents the combined allowable debt on two residences. Prior to the enactment of the Tax Cuts and Jobs Act of 2017, mortgage interest on up to $100,000 of debt on home equity loans or lines of credit also qualified for the deduction, even if the proceeds of the loan were used for personal reasons, such as a vacation or to pay off bills. However, since 2018, interest on home equity loans are deductible only to the extent the proceeds are used to substantially improve the home that secures the loan and the total of all mortgage loans for the first and second home do not exceed the limitation.

I am a real estate professional. What does this mean for my business?

For many decades, the mortgage interest deduction was a remarkably effective tool that facilitated homeownership. Before the changes made by the Tax Cuts and Jobs Act of 2017 took effect, about a third of all taxpayers in any given year itemized their deductions, and a high percentage of them were homeowners making mortgage payments. Thus, the tax law encouraged homeownership by incentivizing it. However, since 2018, only about one in ten taxpayers itemize their deductions. So, for the majority of homeowners, the tax code no longer encourages Americans to own a home instead of rent one. Many of those who still are able to itemize receive the benefit of the mortgage interest deduction, but these are most often not first-time buyers but taxpayers with higher incomes. Therefore, the deduction has been criticized as not targeting its benefits where they are most needed.

NAR Policy

NAR strongly opposed the changes in the 2017 Act that limited the use of the mortgage interest deduction. And NAR continues to strongly support the mortgage interest deduction for those who can itemize. However, because it is quite unlikely Congress will reverse the change that led to the deduction being eliminated for most homeowners, NAR also supports a tax credit for buying and owning a home that is not based on the mortgage interest deduction. Rather, such a credit would be designed for those who want to purchase a home but are finding it difficult to afford one.

Legislative/Regulatory Status/Outlook

The majority of the changes made by the Tax Cuts and Jobs Act of 2017, including the new limits on the mortgage interest deduction, and the near doubling of the standard deduction that greatly minimized the use of itemized deductions such as the MID, were scheduled to expire at the end of 2025. However, the One Big Beautiful Bill Act of 2025 made many of the changes made in the 2017 Act permanent, including the changes to the mortgage interest deduction.

Now that these changes have been permanently set into law, there is increased doubt that many members of Congress would support a reduction in the standard deduction. Indeed, the 2025 tax act further increased the standard deduction. Many taxpayers believe a higher standard deduction was a positive change, and even some homeowners and policymakers do not appreciate the connection between a higher standard deduction and a decreased tax incentive to purchase and own a home.

NAR Committee:

Federal Taxation Committee