What is the mortgage interest deduction limit for 2026? You can deduct interest on up to $750,000 of home acquisition debt ($375,000 if married filing separately) on your main home and one second home. Loans from before December 16, 2017 keep the older $1 million limit. The One Big Beautiful Bill Act made the $750,000 cap permanent rather than letting it expire after 2025.
What's new for 2026: the itemized deduction for mortgage insurance premiums (PMI, FHA premiums, VA funding fees and Rural Housing Service guarantee fees) is back for tax year 2026, with an income phaseout. Either way, you only benefit if you itemize, and the 2026 standard deduction is $32,200 for married couples filing jointly.
Data note: Figures come from IRS Publication 936 (2025), IRS draft Publication 936 for tax year 2026, IRS 2026 inflation-adjustment announcements and the IRS correction notice on the 2026 SALT limit, read November 9, 2026. This is general information, not tax advice.
2026 Mortgage Interest Deduction Facts
- Debt limit: $750,000 ($375,000 MFS) for debt incurred after Dec. 15, 2017; made permanent
- Grandfathered debt: $1 million ($500,000 MFS) for debt incurred Oct. 14, 1987 through Dec. 15, 2017
- Homes covered: main home plus one second home, combined
- PMI deduction: reinstated for 2026 on Schedule A, line 8d
- PMI phaseout: begins above $100,000 AGI ($50,000 MFS); gone above $109,000 ($54,500 MFS)
- Home equity interest: deductible only if proceeds were used to buy, build or substantially improve the home
- 2026 standard deduction: $16,100 single · $24,150 head of household · $32,200 married filing jointly
- 2026 SALT cap: $40,400 ($20,200 MFS), reduced above $505,000 MAGI but not below $10,000
Do You Actually Benefit? The Itemizing Test
The deduction only helps if your total itemized deductions beat your standard deduction. For 2026, the IRS standard deduction is:
- $16,100 for single filers and married filing separately
- $24,150 for heads of household
- $32,200 for married couples filing jointly
For homeowners, the main itemized deductions are usually mortgage interest, property taxes, state income tax and charitable gifts. The SALT category, which covers state and local income, sales and property taxes, is capped at $40,400 for 2026 ($20,200 MFS). The cap phases down when modified AGI exceeds $505,000 ($252,500 MFS) but never drops below $10,000 ($5,000 MFS).
Arizona context: Arizona's flat state income tax is relatively low (see does Arizona have state income tax?), so many Arizona households have a smaller SALT number than owners in high-tax states. That makes the mortgage interest line more important when you're deciding whether to itemize. Ask your tax preparer to run both ways.
The PMI Deduction Is Back for 2026
IRS draft Publication 936 for 2026 states that the itemized deduction for qualified mortgage insurance premiums has been reinstated for tax year 2026. Highlights:
- Qualified insurance includes coverage from the VA, FHA and Rural Housing Service, plus private mortgage insurance
- The insurance must relate to home acquisition debt on a first or second home, with the contract issued after 2006
- Report it on Schedule A, line 8d
- The deduction shrinks when AGI is over $100,000 ($50,000 MFS) and is eliminated above $109,000 ($54,500 MFS)
If you're paying PMI now, the better long-term move is often getting rid of it. See how to remove PMI.
Home Equity Loans and HELOCs
According to the IRS, interest on a loan secured by your home is deductible only to the extent the proceeds were used to buy, build or substantially improve that home, no matter when you borrowed. A HELOC for a kitchen remodel can qualify (within the overall limit). A HELOC used to pay off a car or credit cards does not. Weighing the two? Read HELOC vs. cash-out refinance in Arizona.
Points and Year-End Timing
IRS Publication 936 explains that points paid on a loan to buy your main home can often be deducted in full in the year paid if certain tests are met, while points on a refinance are generally deducted over the life of the loan. Lenders report interest on Form 1098, so keep your closing disclosure with your tax records, especially if you bought or refinanced this year.
“Clients are often surprised that the mortgage interest deduction doesn't help them because they take the standard deduction. On a purchase in the $700,000 to $1 million range, I suggest they sit down with their CPA before they choose a loan amount and decide on PMI versus a larger down payment. The 2026 changes make that conversation more worthwhile.”
— Elizabeth Vijan, Tackett Team, eXp Realty
Frequently Asked Questions
What is the mortgage interest deduction limit for 2026?
$750,000 of home acquisition debt ($375,000 MFS), or $1 million for debt incurred before Dec. 16, 2017.
Is PMI tax deductible in 2026?
Yes, it's reinstated for 2026. It phases out above $100,000 AGI and is gone above $109,000 ($50,000 and $54,500 MFS).
Can I deduct mortgage interest on a second home?
Yes. Your main home plus one second home qualify, and the debt limit applies to both combined.
Is home equity loan interest deductible in 2026?
Only if the proceeds were used to buy, build or substantially improve the home securing the loan.
Buying Before Year-End or Early 2026?
I'll connect you with trusted lenders and help you compare loan size, down payment and PMI options with your tax picture in mind, before you're under contract.
Elizabeth Vijan | Tackett Team, eXp Realty
Scottsdale & Phoenix Real Estate Specialist
Talk With Elizabeth · Call or text 602-885-7752
Sources: IRS Publication 936 (2025): Home Mortgage Interest Deduction · IRS draft Publication 936 for tax year 2026 (PDF) · IRS: Working Families Tax Cuts, individuals and workers (2026 standard deduction) · IRS: Correction to 2026 SALT deduction amount · Thomson Reuters: What OBBB means for itemized deductions
Disclaimer: General information only, not tax advice. The 2026 Publication 936 cited is an IRS draft and could change before release. Consult a CPA or tax professional about your situation. Information deemed reliable but not guaranteed. Equal Housing Opportunity.
Tackett Team, eXp Realty · Get in touch