Mortgage Interest Deduction Calculator
Build the interest figure from a real amortization schedule, cap it at the debt limit, then find out how much of it survives the standard deduction — which is where most of the value disappears.
Mortgage interest deduction estimator
Nothing is deductible until you clear the standard deduction
This is the correction that changes the answer more than any other, and the one most calculators omit entirely. Schedule A is an alternative to the standard deduction, not an addition to it. If your itemised total is $28,000 against a $32,200 standard deduction, you take the standard deduction and the mortgage interest produces zero benefit — not a smaller benefit, zero.
What produces value is only the excess above the line. In that example, itemising would be worse than the standard deduction, and the correct answer for the interest's contribution is nothing at all.
Because the 2026 standard deduction is $16,100 for single filers, $24,150 for head of household, and $32,200 for married filing jointly, and because the 2017 law roughly doubled those figures, a large share of homeowners with modest mortgages now get no federal benefit from their interest at all. That is not a calculation error — it is the intended design.
Interest is not the loan amount times the rate
A 30-year amortised loan charges interest on the outstanding balance, and the balance falls with every payment. The first payment on a $400,000 loan at 6.5% contains $2,166.67 of interest; the twelfth payment contains about $2,144.53. Summed across a year, the interest is $25,868.36, not the $26,000 that multiplying $400,000 by 6.5% would suggest.
The gap grows with time. By year fifteen the annual interest has fallen to about $19,300 — a quarter below the first year — even though the rate has not moved. A calculator that multiplies once and stops will overstate the deduction badly in the back half of a loan — which matters if you are deciding whether itemising is worth the paperwork in a given year.
The Form 1098 your lender sends in January is the authoritative figure for the year that just ended. Use it if you have it; use an amortization schedule if you are projecting forward.
The $750,000 limit stopped being temporary
For debt incurred after December 15, 2017, the deduction is limited to interest on $750,000 of acquisition debt, or $375,000 for married filing separately. That cap was written to expire after 2025 and revert to $1,000,000 — and a great deal of published guidance still assumes the reversion happened.
It did not. The One Big Beautiful Bill Act made the $750,000 figure permanent. The only route to the $1,000,000 limit is grandfathered debt from on or before December 15, 2017, including certain refinancings of that older debt up to its original balance. If you are reading an article that promises a return to $1,000,000, it is out of date.
Over the limit, the deduction prorates rather than vanishes
Two things about the cap are worth internalising. First, it is a limit on the debt, not on the interest: the deduction is the fraction of your interest that corresponds to debt within the limit. If your average balance is $900,000 against a $750,000 cap, roughly 83% of the interest is deductible, not none of it.
Second, the cap covers combined acquisition debt across your main home and one qualified second home. A $600,000 mortgage on the house plus a $200,000 mortgage on a cabin is $800,000 of debt against one $750,000 ceiling, not two separate allowances. Publication 936 Table 1 walks the worksheet; the average balance for the year, not the year-end balance, is the input.
Home equity debt: closed, with a narrow door
Interest on a home equity loan or line of credit is deductible only when the proceeds went to buy, build, or substantially improve the same residence that secures the loan. Draw on the line to pay off credit cards, buy a car, or cover tuition and the interest is nondeductible personal interest — regardless of the fact that the loan is secured by your house.
This restriction was part of the 2017 law and, like the debt cap, is now permanent. It did not lapse after 2025. What matters is what the money bought, and the burden of proving it is yours: Form 1098 reports total interest without distinguishing the qualifying portion, so a simple log of each draw with its date, amount, and purpose is the only defence.
Mortgage insurance is deductible again in 2026
Qualified mortgage insurance premiums — FHA, VA, Rural Housing Service, and private mortgage insurance on contracts issued after 2006 — are treated as home mortgage interest starting with tax year 2026, after the deduction had expired following 2021. The One Big Beautiful Bill Act restored it without a sunset.
The income test is aggressive. The deduction phases out for adjusted gross income above $100,000 and is gone entirely at $110,000, with half those thresholds for married filing separately. For a household in a high-cost metro, the deduction is likely unavailable on income grounds even though it exists in law.
What the deduction is worth, honestly
The benefit is the excess itemised amount multiplied by your marginal rate, and nothing more. Two consequences follow that are worth stating plainly.
A higher bracket raises the value, which is why the deduction is worth more to a household at 32% than at 12% on identical interest. And a larger standard deduction erodes it: the 2026 figures mean a single filer needs more than $16,100 of itemised deductions before the mortgage enters the picture at all.
The deduction should never drive the decision to borrow. Interest costs a dollar; the deduction returns at most 37 cents of that dollar. Paying off a mortgage early eliminates a real expense to give up a partial offset — which is why the arithmetic in a payoff calculator almost always favours paying down, and why an early-payoff decision should not be modelled net of a deduction you may not be receiving.
Frequently asked questions
Is mortgage interest deductible with the standard deduction?
No. It requires itemising on Schedule A, and itemising only helps to the extent the total exceeds the standard deduction — $16,100 single, $24,150 head of household, $32,200 joint for 2026.
What is the debt limit in 2026?
$750,000 for debt incurred after December 15, 2017, or $375,000 married filing separately. That cap is now permanent. Debt from on or before that date keeps the $1,000,000 limit.
How much interest do I pay in year one?
Less than loan amount times rate, because the balance declines monthly. On $400,000 at 6.5% over 30 years the first year is $25,868 rather than $26,000, and the difference widens in later years.
Can I deduct HELOC interest?
Only if the proceeds bought, built, or substantially improved the same home securing the loan, and the combined debt stays under the limit. Spending it on credit cards or tuition makes the interest nondeductible, and that rule is permanent.
Is PMI deductible in 2026?
Yes, restored as qualified mortgage interest from tax year 2026, but it phases out above $100,000 of AGI and disappears at $110,000 — half those amounts for married filing separately.
Does paying off the mortgage early reduce my deduction?
Yes, and that is not a reason to avoid it. Interest costs a dollar; the deduction returns at most 37 cents of that dollar. Avoiding the interest wins on arithmetic every time.
Does the limit apply to a second home?
Yes, but as one shared ceiling. Combined acquisition debt on the main home and one qualified second home is measured against a single $750,000 limit. A rental is not a qualified residence and belongs on Schedule E.
Disclaimer: This calculator estimates a federal benefit for general information and is not tax, legal, or financial advice. It does not model the alternative minimum tax, the itemised deduction limitation at the top bracket, state treatment, or the Publication 936 average-balance worksheet. Confirm with IRS Publication 936, your Form 1098, or a licensed tax professional.
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