How much of my mortgage interest is tax-deductible?

For a loan taken out after December 15, 2017, federal law lets you deduct the interest on the first $750,000 of your loan balance ($375,000 if married filing separately). California allows interest on up to $1,000,000. On a larger loan, only the share of interest tied to those limits is deductible.

Is homeowner’s insurance tax-deductible?

No. Homeowner’s (hazard) insurance on your primary residence is not deductible. Only mortgage interest and property tax — within the SALT cap — reduce your taxable income.

What is the SALT deduction cap for 2025?

For 2025 the state-and-local-tax (SALT) deduction is capped at $40,000 ($20,000 married filing separately), with a phase-down for incomes over $500,000. Property tax plus state income tax paid count toward this cap.

Is this calculator tax advice?

No. It produces an estimate based on the scenario you enter and 2025 federal and California tax law. It is not tax advice, not a loan offer, and not a commitment to lend. Confirm your situation with a CPA.

Homeowner Tax Benefit Estimator

Income Tax Savings Calculator for California Homebuyers

Enter your own scenario and get a first-year estimate of the mortgage-interest and property-tax deductions a home could take off the top of your taxable income — plus a download-ready PDF.

Your contact info

First name

Last name

Mobile phone

The home & loan (your scenario)

These are your own numbers — Cali Mortgage isn't quoting a rate here.

Purchase price

Down payment

Interest rate

Loan term

Property tax rate

State

Tip: California property tax is roughly 1.1%–1.25% of the purchase price. Homeowner's insurance isn't tax-deductible, so leave it out.

Your income & filing

Filing status

Dependent children

Advanced: enter exact W-2 figures for a more precise result

Annual gross income (all W-2 wages)

W-2 Box 1 wages

Federal tax withheld (Box 2)

State income tax paid (CA)

Box 2 lets us show how a W-4 change could increase your take-home pay.

I agree Cali Mortgage may contact me about my inquiry by phone, text, and email at the number and address I provided (including by autodialer for texts). Consent isn't a condition of any purchase; msg & data rates may apply; reply STOP to cancel. No credit pull. This tool provides an estimate, not tax advice or a loan offer.

Your information is private and used only to prepare your estimate.

How homeowner tax deductions work

Buying a home changes your income taxes because two of the biggest costs of ownership — the mortgage interest you pay and your property tax — can be itemized deductions that lower your taxable income. In the early years of a loan almost every dollar of your payment is interest, so the deduction is largest right when a new buyer feels the payment most. This calculator estimates your first-year mortgage interest, the portion that is actually deductible, and the resulting federal and California income-tax savings for the scenario you enter.

The $750,000 mortgage-interest limit

For any loan taken out after December 15, 2017, federal law limits the mortgage-interest deduction to the interest on the first $750,000 of loan balance ($375,000 if you file married filing separately). On a jumbo loan above that, only part of your interest is federally deductible — a detail many buyers get wrong. California is more generous and still allows interest on up to $1,000,000 of loan balance, so your state deduction is often larger than your federal one.

Property tax and the SALT cap

Property tax is deductible, but it shares a single "state and local tax" (SALT) bucket with the state income tax you pay. For 2025 that bucket is capped at $40,000 ($20,000 married filing separately), with a phase-down for very high incomes. In high-tax California the cap is easy to reach, so this calculator applies it the way your return would. Homeowner's insurance, by contrast, is never deductible — a common point of confusion. If you are buying in a Mello-Roos district, see how Mello-Roos assessments work and how Placer and Sacramento County property taxes compare, because those affect the property-tax figure you enter here.

Turning the deduction into take-home pay

Because these deductions lower the tax you owe, many new homeowners are over-withholding from each paycheck once they buy. Adjusting your W-4 can put some of that money back in your monthly budget instead of waiting for a refund — but withhold too little and you can owe at filing. Enter your W-2 details in the advanced option above to see the rough size of that adjustment, then confirm the exact change with Aaron or your CPA. New to all of this? Start with our first-time buyer guide, compare purchase loan options, or contact Aaron to talk through your numbers.

This calculator is an educational estimate, not tax advice or a loan offer. Figures use 2025 federal and California tax law and the scenario you enter. Consult a CPA about your specific situation.