Part of your mortgage payment can be tax deductible, but not the whole payment. Mortgage interest, property taxes, and (starting in 2026) mortgage insurance can be deducted, but only if you itemize, and principal never is.
Here’s what qualifies, what changed for 2026, and how to tell whether the deduction will actually lower your tax bill. This is general information, not tax advice, so check your own situation with a tax professional.
Key takeaways
- Interest, not principal. The interest portion of your payment can be deductible; the principal you pay back is not.
- You have to itemize. The deduction only helps if your itemized deductions add up to more than the standard deduction ($32,200 for married couples filing jointly in 2026).
- Mortgage insurance is deductible again. Starting with tax year 2026, PMI and FHA mortgage insurance count as deductible mortgage interest, with an income phase-out.
- The $750,000 cap is permanent. Interest is deductible on up to $750,000 of mortgage debt for loans taken out after December 15, 2017.
- Homeowners insurance doesn’t count. Insurance on your own home isn’t deductible.
What part of a mortgage payment is tax deductible?
The interest is the main deductible piece. Your monthly payment usually includes:
- Principal (paying back what you borrowed)
- Interest (the cost of borrowing)
- Property taxes
- Homeowners insurance
- Mortgage insurance, if you have it
Interest, property taxes, and mortgage insurance can be deductible. Principal and homeowners insurance are not.
A simple example
Say your monthly payment includes $900 of interest and $600 of principal. Over a year that’s $10,800 in interest, which may be deductible. The $7,200 in principal is not.
You don’t have to add this up yourself. Your loan servicer sends Form 1098 each January showing the mortgage interest you paid, plus mortgage insurance premiums and points where they apply.
Do you have to itemize to deduct mortgage interest?
Yes. Mortgage-related deductions only count if you itemize on Schedule A instead of taking the standard deduction. For 2026, the standard deduction is $16,100 for single filers, $24,150 for heads of household, and $32,200 for married couples filing jointly.
That’s why many homeowners get no extra tax benefit from their mortgage. In the example above, a married couple with $10,800 of interest and $6,000 of property taxes has $16,800 of itemized deductions. That’s well under the $32,200 standard deduction, so they’d take the standard deduction instead.
Itemizing tends to pay off with a larger loan, a higher rate, higher property taxes, or big charitable gifts. A tax professional can run both ways for you.
Who qualifies for the mortgage interest deduction?
To deduct mortgage interest, generally:
- The home is a qualified residence. Your main home and one second home can count.
- You’re legally responsible for the loan. Your name is on the mortgage.
- The loan is secured by the home. The home is the collateral.
- You itemize. See above.
- The debt is within the limit. Interest is deductible on up to $750,000 of mortgage debt ($375,000 if married filing separately) for loans taken out after December 15, 2017. Older loans keep the $1 million limit. The One Big Beautiful Bill Act made the $750,000 cap permanent.
Interest on a home equity loan or HELOC is only deductible if the money was used to buy, build, or substantially improve the home that secures it.
What else related to your mortgage can be deductible?
Property taxes
Property taxes count toward the state and local tax (SALT) deduction. For 2026 the SALT cap is $40,400 ($20,200 if married filing separately), and it phases down for incomes above $505,000.
Mortgage points
Points you paid to lower your rate on a home purchase are often deductible in the year you paid them. Points on a refinance are generally deducted over the life of the loan.
Mortgage insurance premiums
Starting with tax year 2026, mortgage insurance premiums (conventional PMI and FHA mortgage insurance) are treated as deductible mortgage interest. The deduction phases out for adjusted gross income above $100,000 and is gone above $109,000 ($50,000 and $54,500 if married filing separately). If you have PMI on a conventional loan or mortgage insurance on an FHA loan, this may help on your 2026 return.
What is not tax deductible?
These mortgage-related costs can’t be deducted on your own home:
- Principal payments
- Homeowners insurance
- HOA fees
- Maintenance and repairs
How do you claim the mortgage interest deduction?
- Get Form 1098 from your loan servicer (it usually arrives by the end of January).
- Find the mortgage interest, points, and mortgage insurance amounts.
- Add up your property taxes and other itemized deductions.
- Compare the total with your standard deduction.
- If itemizing is higher, report the amounts on Schedule A.
The tax break buyers overlook
Yes, yes and more yes! This part is so seriously overlooked when it comes to buying a home. Mortgage interest and PMI are treated like dirty words online, but they’re the big ones that can actually pay you back at tax time.
They can push you past the standard deduction and into itemizing, where you get money back on your taxes. I wish more people understood this one benefit of owning a home.
Bottom line: know what you’re really saving
Mortgage interest is highest in the early years of a loan, so the potential deduction is biggest then. But it only helps if you itemize. Before you count on a tax break when deciding how much house to buy or whether to refinance, have a tax professional run your numbers.
Blue Arrow Lending can show you how much of a planned payment goes to interest, taxes, insurance and mortgage insurance, so you and your tax pro start with real figures. You can see today’s numbers on our rates page.
Sources: IRS Publication 936 · CPA Practice Advisor: 2026 standard deduction · Kiplinger: SALT cap for 2026
This article is general information, not tax advice. Tax rules change; consult a qualified tax professional about your situation.
Frequently Asked Questions
No. Only the interest portion, plus property taxes and (starting in 2026) mortgage insurance, can be deductible, and only if you itemize. Principal and homeowners insurance are not deductible on your own home.
Yes. Starting with tax year 2026, mortgage insurance premiums are treated as deductible mortgage interest. The deduction phases out between $100,000 and $109,000 of adjusted gross income ($50,000 to $54,500 if married filing separately), and you have to itemize to claim it.
First-time buyers can deduct mortgage interest, property taxes and mortgage insurance the same way any homeowner can, if they itemize. There isn’t a separate federal deduction just for buying a first home.
Not on your own home. Homeowners insurance on a personal residence is a personal expense. It may be deductible for a rental property or the business-use part of a home.
Broker/Owner of Blue Arrow Lending with 13 years of experience originating mortgages. Jenn helps borrowers in Colorado, Florida, Texas, and Wyoming understand the full cost of a home payment.
This article is for general educational purposes only and is not a commitment to lend. Loan program requirements, down payment minimums, and mortgage insurance rules are general guidelines and are subject to change. All loans are subject to credit approval, underwriting, and property eligibility. Blue Arrow Lending, NMLS# 2046633. Jenn Moretti, NMLS# 573143. Licensed in Colorado, Florida, Texas, and Wyoming. Equal Housing Opportunity.