The home mortgage interest deduction allows homeowners to deduct the interest they pay on a qualified mortgage, which can significantly reduce taxable income if they itemize deductions.
You can generally deduct interest on loans used to buy, build, or improve your main home or a second home, up to the IRS loan limits (currently interest on up to a certain mortgage amount depending on when the loan was issued).
Most homeowners receive Form 1098 from their lender showing how much interest they paid during the year.
Mortgage insurance sometimes is deductible, it will depend on current law; interest on a home equity loan can be deducted only if the funds were used to improve the home, not for personal expenses.
Points paid at closing are often deductible (either all at once or over the life of the loan). It’s also important to know that only interest is deductible—not your monthly principal payments.
This deduction provides the biggest benefit to homeowners whose combined itemized deductions exceed the standard deduction, helping to lower their overall tax bill.
For more information click in this link: IRS.gov