Mortgage Interest Deduction Calculator
The mortgage interest deduction allows homeowners who itemize on Schedule A to deduct interest paid on home acquisition debt up to $750,000 (for mortgages originated after December 15, 2017). This calculator estimates the annual interest you paid on your mortgage and applies the $750,000 cap if needed, then estimates your federal tax savings based on your marginal tax rate. The actual deduction appears on IRS Form 1098 from your lender. Consult a tax advisor for your specific situation.
Mortgage interest deduction formula
Annual Interest = Average Balance * Annual Rate / 100
Deductible Fraction = min(Debt Limit, Balance) / Balance
Deductible Interest = Annual Interest * Deductible Fraction
Tax Savings = Deductible Interest * Marginal Rate / 100
The average balance is the average of your beginning and end-of-year outstanding balance. Your Form 1098 from your lender reports the exact interest paid. If the balance never exceeded the limit, the deductible fraction is 1.00 and all interest is deductible. Per IRS Publication 936.
Mortgage interest deduction rules
- You must itemize deductions on Schedule A; the standard deduction is $14,600 single or $29,200 MFJ (2024).
- The $750,000 cap applies to loans originated after December 15, 2017. Prior loans: $1,000,000 cap.
- Interest on a second home also qualifies if you meet the qualified residence rules.
- Points paid on a purchase mortgage are generally deductible in the year paid.
- This calculator estimates; your actual deduction is the interest reported on Form 1098 from your servicer.
Mortgage interest deduction: frequently asked questions
How much mortgage interest can I deduct?
Under current law (Tax Cuts and Jobs Act 2017), you can deduct interest on home acquisition debt of up to $750,000 ($375,000 if married filing separately) for mortgages taken out after December 15, 2017. Mortgages taken out before that date are subject to the prior $1,000,000 limit.
Do I have to itemize to deduct mortgage interest?
Yes. Mortgage interest is an itemized deduction (Schedule A). You only benefit from the deduction if your total itemized deductions exceed your standard deduction ($14,600 single or $29,200 married filing jointly in 2024). Most homeowners with large mortgages will benefit from itemizing.
What counts as home acquisition debt?
Home acquisition debt is debt used to buy, build, or substantially improve a qualified home. It includes your primary mortgage and may include a second home. Interest on home equity loans used for other purposes (not home improvement) is no longer deductible under the TCJA.
How do I calculate my deductible interest if my loan exceeds $750,000?
If your loan balance exceeds $750,000, only the interest attributable to the $750,000 is deductible. The deductible fraction = $750,000 / outstanding loan balance. Multiply your total interest paid by this fraction.
Does the mortgage interest deduction apply to investment properties?
Investment property mortgage interest is deductible as a business expense on Schedule E, not Schedule A, and is not subject to the $750,000 cap. The deduction fully offsets rental income. Consult IRS Publication 527 for rental property rules.
Official sources
- IRS Publication 936: Home Mortgage Interest Deduction.
- IRS Form 1098: Mortgage Interest Statement.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.