Mortgage Interest Deduction 2026: Rules, Limits, and PMI

As homeowners prepare their finances for 2026, understanding the Mortgage Interest Deduction (MID) is critical. Thanks to recent legislative changes—specifically the One Big Beautiful Bill Act (OBBBA)—many of the temporary tax rules we grew accustomed to have been made permanent or significantly altered.

2026 Acquisition Debt Limits

For mortgages originated after December 15, 2017, the rules are officially permanent: you can only deduct the interest on the first $750,000 of mortgage debt (or $375,000 if married filing separately).

If your mortgage was secured before December 15, 2017, you rest securely in the grandfathered tier. You can continue to deduct the interest on up to $1 million of mortgage debt ($500,000 if married filing separately).

Is PMI Deductible in 2026?

Yes! One of the most sought-after provisions has returned. Beginning in the 2026 tax year, homeowners paying Private Mortgage Insurance (PMI), FHA premiums, VA funding fees, or USDA guarantee fees can once again deduct these costs. Just be aware that this deduction is subject to phase-outs for high earners based on their Adjusted Gross Income (AGI).

Should You Take the Standard Deduction?

You cannot claim the mortgage interest deduction unless you itemize your taxes on Schedule A. For the 2025 tax year (filed in 2026), the standard deductions are:

• Single / Married Filing Separately: $15,750
• Head of Household: $23,625
• Married Filing Jointly: $31,500

Additionally, the 2026 rules raised the State and Local Tax (SALT) deduction cap to $40,000. For many homeowners in high-property-tax states, the combination of a $40,000 SALT deduction plus their mortgage interest will heavily outweigh the $31,500 standard deduction, making itemizing the clear winner.

Home Equity Loans and HELOCs

If you take out a Home Equity Line of Credit (HELOC), the interest is only deductible if you use the funds to "buy, build, or substantially improve" the home that secures the loan. If you use a HELOC to pay off credit card debt or buy a car, that interest is not deductible.