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The mortgage interest deduction allows you to deduct the amount of mortgage interest you paid throughout the year from your taxable income. So, if you have a mortgage, keep meticulous records since the interest you pay on your loan could help you save money on your taxes.

As previously stated, you can deduct the first $1 million of your mortgage debt for your primary home or a second house. Subsequently, you can also do that for the mortgage interest you paid during the tax year.¹ Similarly, you can deduct the interest you spent on the first $750,000 of your mortgage if you acquired the house after Dec. 15, 2017.

Read on for mortgage interest deductions that may help you lower your tax bill.

Lower Your Tax Bill With the Following Mortgage Interest Deductions

Studies show that 80% of Americans who itemize their tax deductions claim mortgage interest deductions.² Thus, this helps them save some money on taxes. Here are items that qualify as mortgage interest deductions.

Mortgage Interest for Your Primary Home

The first item that qualifies for interest deduction is your main home. However, for it to qualify as a deduction, it has to meet some conditions. First, the home must have been used as security for the loan. Additionally, the primary home must be classified as either a house, a condo, an apartment, a trailer, a mobile home, or a houseboat.

It must also contain the three basic living requirements namely cooking, bathroom, and sleeping provisions. You can also deduct mortgage interest if:

  • The military gives you a non-taxable housing allowance
  • You have taken a mortgage to buy out an ex-spouse from a mortgage after divorce

Charges and Penalties on Your Mortgage Payments

Sometimes your mortgage payments may attract penalties or charges which you can use for interest deductions. Thus, if you make your mortgage payments late, you may be charged late payment fees. This fee is an extra cost that counts as a deduction.

On the other hand, some lenders may penalize you for making your mortgage payment early. Lenders impose this penalty to cover the missed interest income they would have earned. You are allowed to use this penalty as a deduction.

Mortgage Interest for Your Secondary Home

Your secondary home qualifies for an interest deduction if the home is a security for the loan and don’t have to utilize the house for the rest of the year. Also, if your home is on rent and you receive rent, If you rent out your home and get rental revenue, you must stay in it for at least 14 days or 10% of the rental time.

Points Paid on Your Mortgage

If you used points to prepay your loan interest, you may use them as a one-time interest deduction or in small bits over the loan period. For your points to qualify, they must have been used to pay for the first home loan.

Similarly, the points must be calculated as a percentage of the loan. They must be lower than your downpayment, and not have been used for closing costs.

Reduce Your Tax Burden With the Above Mortgage Interest Deductions

Taxes can be an overwhelming responsibility. Luckily, as a homeowner, you can leverage your mortgage interest deductions to reduce your bill. The above items qualify for mortgage deductions in 2022.


“About Mountain West Financial and the CalPATH Home Loan Program

Mountain West Financial is the exclusive lender offering CalPATH, the #1 home loan program for Teachers, Police Officers, Firefighters, and other public employees who serve our local California communities.

You may contact our CalPATH Hotline @ 800-310-7577, seven days a week from (8:30 am to 8:00 pm) or visit our website @ A CalPATH advisor will be standing by to answer (any & all) questions you may have about the home buying or refinance process.

We look forward to working with you soon!


Joe Moore

CalPATH Division Manager

NMLS #333648″


Links to External Sources:

  1. Home mortgage interest deductions
  2. Mortgage interest deduction facts