Taxes for homebuyers

The mortgage interest deduction: who benefits and how much

Buyers often hear that owning comes with a big tax break. For many first-time buyers, the mortgage interest deduction saves little or nothing, because it only helps if you itemize and your itemized deductions beat the standard deduction. Here is how to tell, with figures for the 2026 tax year.

Reviewed November 2026 · Written for Buy Home Tips from the sources listed below

Tax year: Tax figures on this page apply to the 2026 tax year. They were checked against IRS material in November 2026, and each figure is labelled with its year. Tax rules change; use the IRS instructions for the year you file.

The home mortgage interest deduction is real, but it is narrower than its reputation. It reduces taxable income only for people who itemize, and many first-time buyers find the standard deduction is larger. Figures below are for the 2026 tax year unless noted, from IRS releases and the draft 2026 Publication 936.

Itemized total against the standard deduction. Worked example from this guide; 2026 tax year

How it works

You can deduct interest paid on home acquisition debt: a loan used to buy, build or substantially improve your main home or a second home, secured by that home. For the 2026 tax year, the draft Publication 936 allows the deduction on the first $750,000 of such debt, or $375,000 if married filing separately. Older loans taken out before December 16, 2017 can qualify for a higher limit.

Interest on home equity loans used for anything other than buying, building or substantially improving the home is not deductible.

Your servicer sends Form 1098 early in the year, showing the interest you paid and, in the year you buy, deductible points.

The standard deduction decides

You claim the deduction on Schedule A, which means giving up the standard deduction. The IRS's 2026 figures are:

Filing status	2026 standard deduction
Single or married filing separately	$16,100
Head of household	$24,150
Married filing jointly	$32,200

Itemizing only helps if your total itemized deductions, including mortgage interest, state and local taxes, charitable gifts and others, are larger than that figure. Only the amount above the standard deduction saves you tax.

State and local taxes

Property taxes count toward itemized deductions, together with state and local income or sales taxes. For 2026, the IRS says the combined limit is $40,400, or $20,200 if married filing separately. The limit is reduced when modified adjusted gross income is above $505,000, or $252,500 if married filing separately, but not below $10,000, or $5,000.

Points

Points you pay to get a mortgage are a form of prepaid interest. Publication 936 lists the tests for deducting points in full in the year you pay them on a loan to buy your main home. They include that the loan is secured by your main home, that paying points is an established practice in your area, and that the points are figured as a percentage of the loan. Seller-paid points can count too. Points that do not meet the tests are deducted over the life of the loan.

Mortgage insurance premiums

The draft 2026 Publication 936 says the itemized deduction for qualified mortgage insurance premiums has been reinstated for 2026. It covers insurance from the VA, FHA or the Rural Housing Service, and private mortgage insurance, for contracts issued after 2006 on acquisition debt for a first or second home. The deduction is reduced when adjusted gross income is more than $100,000, or $50,000 if married filing separately. The VA funding fee and USDA guarantee fee count as mortgage insurance for this purpose.

The bottom line

The deduction helps only if your itemized deductions beat the standard deduction. Run the calculator with your expected interest, taxes and gifts, check the limits and use the IRS instructions for the year you file. If you have a mortgage credit certificate, read that guide too, because the credit reduces the interest you can deduct.

Mini calculator: itemize or take the standard deduction (2026 tax year)

Compares a rough itemized total with your standard deduction for the 2026 tax year. Defaults use the married filing jointly standard deduction of $32,200.

Mortgage interest paid in the year ($)

Property taxes paid in the year ($)

State and local income or sales tax ($)

Other itemized deductions, such as gifts to charity ($)

Your standard deduction ($): 16,100 single, 24,150 head of household, 32,200 joint

Enter your figures to see the result. Nothing you type leaves this page.

2026 tax year. Caps state and local taxes at $40,400 and does not model the reduction above $505,000 of modified AGI, the $750,000 debt limit or the mortgage insurance premium deduction. Not tax advice.

Deciding whether to itemize

Get Form 1098 from your servicer for mortgage interest, points and mortgage insurance.
Add property taxes and state and local income or sales taxes, up to the cap.
Add charitable gifts and other itemized deductions.
Compare the total with your standard deduction for the year.
Check the limits for large loans and for mortgage insurance premiums.
Use the IRS instructions for the year you file, or ask a tax professional.

Questions buyers ask

Can I deduct my mortgage interest?

Only if you itemize. For the 2026 tax year, IRS Publication 936 allows a deduction for interest on up to $750,000 of home acquisition debt, or $375,000 if married filing separately.

What is the standard deduction for 2026?

The IRS lists $16,100 for single filers and married filing separately, $32,200 for married filing jointly and $24,150 for heads of household.

Can I deduct mortgage insurance premiums?

For the 2026 tax year, the deduction for qualified mortgage insurance premiums is reinstated, according to the IRS's draft 2026 Publication 936. It is limited for adjusted gross income above $100,000, or $50,000 if married filing separately.

Are points deductible?

Often. Publication 936 explains when points paid to buy your main home can be deducted in full in the year paid. Other points are deducted over the life of the loan.

Sources checked for this page

Checked November 2026. Programs and limits change; confirm with the source before you rely on a figure.