Mortgage interest deduction: the $750,000 limit in 2026

How much debt counts?

The limit depends on when you took out the loan, according to Publication 936:

The limit covers the combined mortgages on your main home and one second home. A written binding contract signed before December 15, 2017, to close on a principal residence before January 1, 2018 (with the purchase completed before April 1, 2018), is treated as old debt. Refinancing debt that existed before that date keeps the old limit only up to the amount refinanced (26 U.S.C. 163(h)(3)(F)).

The $750,000 figure was first set for 2018 through 2025. As of October 2026, 26 U.S.C. 163(h)(3)(F) reads as applying to tax years beginning after December 31, 2017, with no end year, and IRS Publication 936 (2025) and its 2026 draft both state the $750,000 limit. Check the current Publication 936 for your tax year.

Does home equity interest count?

Only if the money went into the house. Publication 936 says that, no matter when the debt was incurred, you can no longer deduct interest on a loan secured by your home to the extent the proceeds were not used to buy, build or substantially improve it. A home equity line used to remodel the kitchen qualifies. One used to pay off credit cards does not.

What about mortgage insurance and points?

Mortgage insurance premiums. Publication 936 (2025) says this deduction had expired for 2025. The 2026 early release draft says it “has been reinstated for tax year 2026” and goes on line 8d of Schedule A. Under the statute, it covers premiums on acquisition debt for FHA, VA and USDA insurance and private mortgage insurance, and it phases out as income rises: the draft says that if your adjusted gross income (AGI) is more than $109,000 ($54,500 if married filing separately), you cannot deduct them. That draft is not final, so confirm the amounts in the final Publication 936 for 2026. See private mortgage insurance and FHA loans.

Points. Points may be fully deductible in the year paid if you meet all the tests in Publication 936. Otherwise they are deducted over the life of the loan. Publication 936’s example: $4,800 of points on a 20-year loan gives $20 a month, so $60 for three payments in the first year.

Your lender reports interest of $600 or more on Form 1098. Mortgage insurance premiums are included on that form.

Which homes and which timing rules apply?

The deduction covers a main home and one second home. Prepaid interest follows the year it belongs to: Publication 936 says that if you prepaid interest in 2025 that accrued in full by January 15, 2026, you cannot deduct the January 2026 amount in 2025. Your lender’s Form 1098 may include such a prepayment, so check box 1 against the interest that really accrued in the year.

Is it worth itemizing?

Only if your itemized deductions beat the standard deduction. For tax year 2026, the IRS lists $32,200 for married couples filing jointly, $16,100 for single filers and married filing separately, and $24,150 for heads of household.

A worked example for 2026, joint filers: mortgage interest $22,000 plus real estate taxes $12,000 is $34,000 of itemized deductions. That beats the $32,200 standard deduction by only $1,800. The mortgage interest, taken alone, did not produce a $22,000 tax benefit. Property taxes are limited by the SALT cap; see property tax deduction.

Where states differ

The federal limit is the same in every state. How your state taxes income, and whether it lets you deduct mortgage interest on a state return, is set by the state, so check your state revenue agency. For how property taxes vary, see Texas property tax and California property tax.