What do I enter for mortgage interest if my mortgage wasn't fully used to build, buy, or substantially improve my home?

If your entire mortgage is a home equity loan used for a purpose other than to buy, build, or substantially improve your home, don't enter any interest here. This mortgage interest isn't deductible.

If part of your mortgage was used to buy, build, or substantially improve your home and part of your mortgage was used for something else (like buying a car), then you'll need to do the following calculation to determine what to enter for your mortgage interest:

1. Determine your ending mortgage balance as of December 31, 2025.
2. Divide your original mortgage amount that was used to buy, build, or substantially improve your home by the ending mortgage balance from step one. If the result is greater than 1, your entire mortgage interest shown on Form 1098, Box 1 is deductible. So, you can skip step 3 and enter the entire amount here. Otherwise, go to step 3.
3. Multiply the amount you got in step 2 by the mortgage interest shown on your Form 1098, Box 1. This is the mortgage interest amount to enter here.

For example: Let's say you took out a second mortgage on your home in the amount of $200,000 and $180,000 of that was used to substantially improve your home while $20,000 of that was used to purchase a car. Your mortgage ending balance as of December 31, 2025 was $190,000 and your mortgage interest shown on Form 1098, Box 1 is $2,000. With this information, you'd do the following steps:

1. $190,000
2. $180,000 divided by $190,000 equals 0.94737.
3. 0.94737 multiplied by $2,000 equals $1,894.74, which can be rounded to $1,895 which you'd enter here