The short version
What you can deduct: interest on up to $750,000 of debt used to buy, build or substantially improve your main home and one second home ($375,000 if married filing separately). Older loans, taken out on or before December 15, 2017, keep a $1,000,000 limit.
The catch: it is an itemized deduction. It only saves you money if your itemized total beats the standard deduction, which for 2026 is $16,100 single, $32,200 married filing jointly and $24,150 head of household.
New for 2026: mortgage insurance premiums — PMI, FHA, VA and USDA — are treated as deductible mortgage interest again, with an income phase-out.
What the deduction actually is
The tax code calls it the deduction for qualified residence interest. In everyday terms: if you itemize, the interest you pay on a loan secured by your home — and used to buy, build or substantially improve that home — comes off your taxable income. It is claimed on Schedule A of Form 1040, using the figures your loan servicer reports to you and to the IRS on Form 1098 each January.
Three things have to be true for the interest to qualify. The loan must be secured by the home (a recorded mortgage, not a personal loan). The home must be a qualified home: your main residence, or one other residence you choose to treat as your second home. And the money must be acquisition debt: borrowed to buy, build or substantially improve that home. A refinance keeps its acquisition-debt status up to the balance it replaced, plus any extra you actually spend on improvements.
The 2025 tax law — Public Law 119-21, the One Big Beautiful Bill Act — made the post-2017 rules permanent. Before it passed, the $750,000 cap and the home-equity restriction were scheduled to expire after 2025. They no longer are.
Itemize or take the standard deduction? That decides everything
This is where most homeowners overestimate the deduction. Mortgage interest does not reduce your tax dollar for dollar, and it does nothing at all unless your itemized deductions add up to more than the standard deduction you would get anyway.
For the 2026 tax year the IRS set the standard deduction at $16,100 for single filers and married people filing separately, $32,200 for married couples filing jointly and $24,150 for heads of household (IRS Revenue Procedure 2025-32). Taxpayers 65 and older can add a temporary $6,000 deduction for 2025 through 2028 on top of that, whether or not they itemize.
So the real question is what else goes on Schedule A alongside the interest. For a Florida homeowner the list is usually short:
| Schedule A line | What a Florida homeowner puts there |
|---|---|
| Mortgage interest | Box 1 of each Form 1098, subject to the $750,000 acquisition-debt cap. |
| Mortgage insurance premiums | Box 5 of Form 1098, deductible again from tax year 2026, with an income phase-out. |
| State and local taxes (SALT) | Florida has no state income tax, so this is mainly property tax — plus, if you choose, general sales tax instead of income tax. The 2025 law raised the SALT cap to $40,000 for 2025, rising slightly each year through 2029, and phases it down for higher incomes. |
| Charitable gifts | Cash and non-cash donations to qualified organizations. |
| Medical expenses | Only the portion above 7.5 percent of adjusted gross income. |
If those lines together clear the standard deduction, the deduction is worth roughly your marginal tax rate multiplied by the amount you clear it by. If they do not, the mortgage interest has no tax value at all that year — and that is a perfectly normal outcome, not a mistake on your return.
The $750,000 cap, and what it means for larger loans
The limit applies to the combined acquisition debt on your main home and one second home, not to each loan separately. Married couples filing separately get $375,000 each. Loans taken out on or before December 15, 2017 — and refinances of those loans, up to the old balance — are grandfathered at $1,000,000.
Going over the cap does not wipe out the deduction. IRS Publication 936 walks you through a proration: multiply the interest you paid by the limit divided by your average loan balance for the year. Someone with an average balance of $1,000,000 deducts about three-quarters of the interest; someone at $1,500,000 deducts about half. The rest is simply personal interest, which is not deductible.
In South Florida this cap is a live issue. Plenty of purchases in Miami-Dade, Broward and Palm Beach counties are financed with loans above the conforming limit, and buyers sometimes assume the whole interest bill is deductible because it always was on their previous, smaller home. If you are financing at that level, the jumbo side of the company, JumboLoan.com, handles the loan — and your tax professional should see the numbers before you decide how large a loan to carry.
Which loans count
| Loan | Interest deductible? | Notes |
|---|---|---|
| Purchase mortgage on your main home | Yes | Up to the cap. The classic case. |
| Second home you do not rent out | Yes | Shares the cap with your main home. You do not have to use it during the year, as long as it is not held out for rent. |
| Second home you rent part of the year | It depends | Publication 936 has a personal-use test (14 days or 10 percent of rental days) that decides whether it is still a qualified home. |
| Rate-and-term refinance | Yes | Acquisition-debt status carries over up to the balance refinanced. |
| Cash-out refinance | Partly | Deductible on the portion that replaced the old loan and the portion spent on substantial improvements; not on cash used for anything else. |
| Home equity loan or HELOC | Only if | The proceeds bought, built or substantially improved the home securing it. Debt consolidation, tuition and cars do not qualify. |
| Loan on a rental or investment property | Not here | That interest is a business expense on Schedule E. No cap, no itemizing needed. See investment property financing. |
| A home you own where a parent or adult child lives | Usually | If you do not charge rent, it can be your second home for this purpose. See our guide to buying a home for your parents or adult child. |
Points
Discount points you pay to buy down the rate on a purchase loan for your main home are generally deductible in full in the year you pay them, provided the loan is secured by the home, paying points is an established practice in your area, the points are not out of line with what is normally charged, and you paid them from your own funds rather than borrowed them. Publication 936 lists the full set of conditions.
Points on a refinance work differently: you deduct them ratably over the life of the loan. If you later pay that loan off — by selling or by refinancing again with a different lender — the undeducted remainder is generally deductible in that year.
Points show up in Box 6 of Form 1098 for a purchase. For a refinance you will usually need your Closing Disclosure to find them.
Mortgage insurance premiums are back on Schedule A
From 2007 through the 2021 tax year, homeowners who itemized could deduct mortgage insurance premiums as if they were interest. That provision expired, and it stayed expired for 2022 through 2025. Section 70108 of the 2025 tax law reinstated it permanently for premiums paid in tax years beginning after December 31, 2025 — so it applies to the 2026 return you file in early 2027, and every year after.
“Qualified mortgage insurance” means private mortgage insurance on a conventional loan, the FHA mortgage insurance premium, the VA funding fee and the USDA guarantee fee. The deduction phases out once adjusted gross income passes $100,000 ($50,000 married filing separately), shrinking by 10 percent for each $1,000 above the threshold, and is gone entirely at $109,000 ($54,500). Those thresholds are not indexed for inflation, so check the current Publication 936 for the year you file.
If you are paying PMI, our guide to what PMI costs and how to remove it covers the other half of the picture: the premium is deductible, but it is also cancellable, and cancelling it saves more than deducting it.
A worked example (illustration only)
Take a married couple in Broward County filing jointly for 2026. Their Form 1098 shows $19,000 of mortgage interest and $1,900 of mortgage insurance premiums; their property tax bill was $7,200; they gave $1,500 to charity. Itemized total: $29,600. The standard deduction is $32,200. They take the standard deduction, and the mortgage interest saves them nothing. That is the outcome for a large share of Florida homeowners, and it is fine.
Now take a couple with a larger loan in Palm Beach County: $36,000 of interest in the year, $9,500 of property tax and $4,000 to charity, with income above the mortgage-insurance phase-out. Itemized total: $49,500, which beats the standard deduction by $17,300. In the 24 percent bracket that is roughly $4,150 of federal tax saved. Notice that the saving comes from the amount above the standard deduction, not from the whole interest bill.
These figures are invented to show the mechanics. They are not a quote, a payment, or a prediction of your tax result.
Florida specifics
No state income tax. The deduction is a federal one, so it works the same whether you live in Florida, New York or Ohio. What changes is the SALT line: without a state income tax, a Florida homeowner’s SALT deduction is mostly property tax, which makes clearing the standard deduction harder than it is for a taxpayer in a high-income-tax state with the same mortgage.
Homestead is a different animal. Florida’s homestead exemption and the Save Our Homes assessment cap reduce your property tax. They have nothing to do with the federal interest deduction, and buying a second home in Florida does not require, or qualify for, homestead.
Second homes for out-of-state owners. A snowbird who keeps a main home up north and buys a Florida condo can treat the condo as the second home for this deduction. The two loans share the $750,000 cap, and the Florida property tax counts toward the SALT cap alongside the taxes paid at home. If the condo is rented out part of the year, the personal-use test in Publication 936 decides how the interest is split between Schedule A and Schedule E.
Form 1098 and your records
Servicers must send Form 1098 by January 31 for any loan on which you paid $600 or more of interest. Box 1 is the interest, Box 2 the outstanding principal at the start of the year, Box 3 the origination date, Box 5 mortgage insurance premiums and Box 6 points paid on a purchase. If your loan was sold or transferred during the year you will receive one 1098 from each servicer; add them together.
Keep the Closing Disclosure from every purchase and refinance. It is the document that proves what the proceeds were used for, which matters for cash-out refinances, HELOCs and improvement loans if the IRS ever asks.
Frequently asked questions
Is mortgage interest still tax deductible in 2026?
Yes. Interest on home acquisition debt of up to $750,000 ($375,000 if married filing separately) is deductible on Schedule A, and the 2025 tax law made that limit permanent. You only benefit if your itemized deductions add up to more than the standard deduction for your filing status.
Can I deduct the interest on a second home in Florida?
Generally yes. The deduction covers your main home plus one other residence, and the two loans share the same $750,000 acquisition-debt limit. If you rent the second home out, the IRS has separate personal-use tests — see Publication 936 and talk to your tax professional.
Does the mortgage interest deduction apply to rental property?
No. Interest on a loan secured by a rental or investment property is a business expense reported on Schedule E, not an itemized deduction on Schedule A, and the $750,000 cap does not apply to it.
Are PMI and FHA mortgage insurance premiums deductible?
Starting with the 2026 tax year, yes. The 2025 tax law treats qualified mortgage insurance premiums — private mortgage insurance, FHA premiums, the VA funding fee and the USDA guarantee fee — as deductible mortgage interest, subject to an income phase-out that begins at $100,000 of adjusted gross income ($50,000 if married filing separately).
What happens if my mortgage is larger than $750,000?
You can still deduct part of the interest. IRS Publication 936 has a worksheet that prorates the interest by the ratio of the $750,000 limit to your average loan balance for the year. Loans taken out on or before December 15, 2017 keep the older $1,000,000 limit.
Do I have to itemize to get the deduction?
Yes. Mortgage interest is an itemized deduction, so it only helps when your itemized total — mortgage interest, property taxes and other state and local taxes up to the cap, charitable gifts and the rest — is bigger than the standard deduction. For 2026 that is $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household.
Buying or refinancing in Florida?
A MortgageQuote.com MLO can walk you through how a purchase, a refinance or a second home changes the numbers on this page — then you take the picture to your tax professional.
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MortgageQuote.com is the consumer brand of New Century Financial Mortgage, LLC, a Florida mortgage brokerage. We are not tax advisers and this page is not tax advice. We publish it because the deduction comes up in almost every conversation about loan size, second homes and PMI, and borrowers deserve a plain-language explanation before they sit down with their CPA.
Sources
- Internal Revenue Service — Publication 936, Home Mortgage Interest Deduction
- Internal Revenue Service — Tax inflation adjustments for tax year 2026 (Revenue Procedure 2025-32), October 2025
- Internal Revenue Service — About Form 1098, Mortgage Interest Statement
- Internal Revenue Service — Topic 505, Interest Expense
- Congress.gov — H.R. 1, One Big Beautiful Bill Act, Public Law 119-21, July 2025 (Section 70108, qualified residence interest)
This article is provided for general informational purposes. It is not tax, legal or financial advice, and it is not a commitment to lend or an offer of any specific rate or term. Dollar figures for the standard deduction, the acquisition-debt limit, the mortgage-insurance phase-out and the SALT cap are drawn from the IRS and Congress.gov sources above and may change; the worked example uses invented figures to show how the rules interact. Consult a qualified tax professional about your own return.
