Mortgage interest deduction: How much can you save?

While buying a home can be expensive, there are some ways in which homeowners could save some money*, including deducting mortgage interest on their taxes. 

The amount that homeowners could save on taxes when deducting their mortgage interest depends on when they got their mortgage, the amount borrowed and uses of their mortgage. This tax benefit could make home purchasing more affordable to buyers by reducing their tax burden. 

Make sure you talk to a tax expert before or during your home loan to find out if you qualify and to learn how much you could save. 

Looking to get a mortgage and take advantage of interest deduction? Start a home loan application. 

If you are a homeowner with a mortgage, you might be able to save on your taxes by deducting part of the interest you pay on your mortgage. 

This deduction is available for first-time homebuyers and seasoned homeowners looking to buy, build or improve their home. To make sure you are able to deduct mortgage interest, you will have to itemize deductions on your taxes. 

For mortgages originated after Dec. 15, 2017, the deduction limit on mortgage interest for married couples filing jointly is $750,000 of debt. For singles or couples filing separately, the limit is $375,000 of debt. 

For mortgages originated before Dec. 16, 2017, the mortgage interest deduction limit for married couples is $1 million of debt, and $500,000 of debt for singles of married couples filing separately. 

The exact rules of deducting mortgage interest depend on the kind of loan you have. If you have a first or second loan, you must stay in your primary residence for a majority of the year. For any loans that access home equity, you will need to use your funds in certain ways for interest to be tax-deductible. And for a refinance, your new loan cannot exceed your original loan amount. 

Your entire mortgage payment does not qualify for deductions, so you will only be able to deduct a portion of the interest you pay on your mortgage. 

You will also only be able to deduct up to the first $350,000 of your mortgage, and $700,000 if you are a married couple filing jointly. 

The biggest thing you will have to do when looking to claim the mortgage interest deduction is itemize your deductions. 

Most people do not itemize their deductions and choose a standard deduction instead. To take advantage of mortgage interest deductions, make sure you itemize all deductions. It is reported that less than 10% of people choose to itemize their tax deductions. 

You can itemize your deductions on Schedule A (Form 1040) and list qualifying interest paid on Form 1098.  

Yes, if you are self-employed, you can deduct interest related to your home office. Your deductions will have to be related to the area of your home that you use exclusively and regularly for business purposes. 

You can still deduct mortgage interest if you refinance** your home depending on the type of refinance you get, amount you have access to and the ways you use your funds. Any points you pay during a refinance are not deductible. 

There are no income limits for mortgage interest deductions. How much mortgage interest you can deduct will depend on when you get your loan, type of loan you get and the amount your loan is for. Your income does not play a part in qualifying for mortgage interest deductions. 

Whether you are a homeowner or planning to be one, understanding the tax benefits you could get might ease some financial burden of buying and owning a home. 

To maximize your tax benefits as a homeowner, make sure you talk to a tax expert and show them your home loan. A tax professional will be able review your mortgage and let you know how much of your mortgage interest could qualify for tax deductions. 

If you are looking to learn about tax benefits as you start the homebuying process and are trying to see how much interest you might pay or how much could qualify for deductions, start by completing a mortgage application. 

_{*Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Rate for current rates. Restrictions apply.} 

_{**By refinancing, you may pay more in costs and interest over the extended term.} 

_{Rate does not provide tax advice. The consumer should always consult a tax advisor for information regarding the deductibility of interest and other charges in their particular situation.} 

_{Information provided is for educational purposes only. It should not be construed as financial or legal advice or instruction. Rate does not guarantee or assume liability for the accuracy, completeness or timelines of the information. You should conduct additional research before making any mortgage related decisions.} 

_{Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.}