Buying your first home is exciting, but it can hit the wallet pretty hard. The good news is there are a few tax breaks that can help soften the blow if you know where to look. As a homeowner, every dollar counts, and these deductions can put some of that hard-earned money back in your pocket.
Quick heads-up before we dive in: I’m a mortgage guy, not a tax pro. Always loop in your tax advisor to make sure these deductions fit your situation.
Mortgage interest deduction
This is the one most folks know about. You’re allowed to deduct the interest you pay on your mortgage, up to the first $750,000 of the loan. If you’re married and filing separately, it drops to $375,000 each.
If you bought your home before December 16, 2017, the limit may be even higher.
And yes, a second home can count if it qualifies as a residence under IRS rules.
Property tax deduction
You can deduct the property taxes you pay during the year, up to $40,000. If you’re married filing separately, your cap gets cut in half. It’s a simple deduction, but it adds up fast, especially in higher-tax areas.
Mortgage insurance deduction
This one was discontinued as of 2025. When it was available, it allowed homeowners to deduct PMI or MIP premiums. There are efforts to bring it back, but for now, it’s not an option.
Energy-efficient home improvement credits
Thinking about upgrading your place? Energy-saving improvements can earn you a tax credit worth 30% of the cost.
There are caps though:
• Up to $1,200 for most home improvements
• Up to $2,000 for heat pumps and boilers
Just make sure the products you pick qualify. Not every upgrade meets IRS guidelines. Newly built homes or properties used for business typically won’t qualify either.
A few other money-saving options for first-time buyers
Deductions are great, but there are other ways to make homeownership a little easier on the wallet.
• Down payment assistance: Many state and local agencies offer grants or special loans to help cover your down payment.
• Housing Choice Voucher (HCV) Program: Some buyers can use vouchers toward a home purchase or monthly mortgage payments.
• Government-backed loans: FHA, USDA, and VA loans often offer low down payments and flexible guidelines.
• State programs: Some states offer additional perks for first-time buyers, so it’s worth checking.
Start your journey the smart way
Before you start house hunting, talk with a lender and get pre-approved. A pre-approval shows what a lender is willing to offer and helps you get a feel for your monthly payment. Once you know your numbers, you can better plan for the tax deductions and credits you may qualify for.
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And again, make sure you check in with your tax advisor for personalized guidance. A little planning goes a long way when you’re stepping into homeownership.
If you’d like to talk through your scenario, visit www.TheMortgageMark.com or call me directly at (215) 378–9272.
Mark Wilkins
Mortgage Loan Officer | NMLS #147661
Licensed in PA, NJ & FL
Movement Mortgage — The Wilkins Lending Team
Named multiple times in Scotsman Guide as a Top U.S. Mortgage Originator
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