Tax isn’t a topic that gets people excited unless it is about a deduction. Sometimes you can get tax deductions from certain expenses you incurred during the tax year. By deducting this amount from your taxable income your lower the amount of taxes you have to pay in that year. 

But if you’re a homeowner with a mortgage, you may be eligible for more tax deductions. The Internal Revenue Service (IRS) provides a mortgage interest deduction as a part of several deductions afforded to homeowners. 

Here Is All You Need to Know About Home Mortgage Deductions

It’s possible to get a mortgage interest deduction on your taxable income by itemizing your returns and following other filing requirements.

What Is Mortgage Interest Deduction?

This is a tax deduction on mortgage interest you pay on the first $1 million of your mortgage debt. However, if you bought your home after December 15, 2017, the deduction is on the first $750,000. To claim your mortgage interest, you need to itemize your tax return. You can utilize the deduction on your primary home and sometimes on your second home

However, the debt has to be used to buy, build, or substantially improve the property for the second home. The following is what qualifies as mortgage interest:

  • The property has to be collateral for the mortgage
  • It can be a house, apartment, house trailer, condo, mobile home, or houseboat
  • The home must have a toilet, cooking, and sleeping facilities
  •  If you took the mortgage to buy out your ex-partner’s half of the house in a divorce.

What’s Not Deductible?

These are the items that do not apply in home mortgage interest deductions:

  • Title and homeowners insurance
  • Settlement cost—not always but most of the time
  • Extra principal payments on your mortgage
  • The interest you’ve accrued on a reverse mortgage
  • Down payments, deposits, and forfeited earnest money
  • Any payments you made while living in the home before the finalization of the purchase. These payments are considered rent.

Claiming Mortgage Interest Deduction

This is what you need to have when claiming your home mortgage tax deduction:

  • You need to have form 1098. Your lender sends this form each January or early February, showing how much mortgage interest you paid. 
  • Have all your records ready on the income and expenses regarding the home.
  • Itemized tax returns. You’ll need to itemize your taxes instead of filing taxes in the standard way. But if your standard deductions exceed your itemized deductions, just use the standard deduction as it will save you time.²

Special Deduction Rules

Some situations call for the application of special deduction rules. This includes when you receive help from a state finance agency. These are programs such as Emergency Homeowners or Hardest Hit Fund administered by the Department of Housing and Urban Migration. You may be eligible to deduct all the payments you’ve made on the mortgage during the tax year. 

Getting to Understand Home Mortgage Deductions

As a public employee, it’s good to utilize any relief on interest you can get. Fortunately, the home mortgage deduction can help you lower your annual taxes and put something back in your pocket. If your mortgage is less than $750,000, the mortgage interest deduction has no impact on you. 


“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”


Links to External Sources:

  1. Mortgage Tax Deduction Calculator
  2. How To Maximize Your Mortgage Interest Deduction