The dark side of the declining mortgage interest deduction: What does this mean in 2026?

In the 2026 Dutch housing market landscape, the mortgage interest deduction (HRA) is no longer the generous fiscal ally it was for decades. Although the reduction in the deduction rate started years ago, homeowners, especially the middle class and start-ups, are only now really feeling the pain in their pockets. Where the HRA was once seen as the engine behind home ownership, in 2026 it became a maximized item that offers less and less compensation for actual housing costs.

As a purchasing advisor and editor, I see that many buyers are still counting on the “tax benefits of the past”. But the reality of 2026 is harsh: net monthly payments are rising, not because interest rates necessarily explode, but because the government has kept the subsidy on that interest rate to a minimum. In this article, we dive deep into the disadvantages of this low deductibility and what this means for your financial planning.

A direct increase in net monthly payments

The most obvious disadvantage in 2026 is the gap between gross and net mortgage costs. In the past, at a high tax rate, you could get almost half of your interest paid back from the tax authorities. Now that the deduction percentage for everyone has been equalized to the base rate (around 37%), the fiscal safety net has become wafer-thin.

• The psychological effect: Buyers often stare blindly at the gross interest rate. However, when they load their source data into their financial planning via Ockto, they are shocked by the marginal difference between gross and net.
• Less disposable income: For an average mortgage in the Randstad of €450,000, the lower deduction simply means hundreds of euros less disposable income per month compared to ten years ago.

Deterioration of borrowing capacity

Banks look at affordability when issuing a mortgage. Because the tax compensation is lower, the net income that remains after paying housing costs falls.

In 2026, lenders will weigh the lower HRA more heavily in their risk models. This means that, despite the increased starter exemption to €555,000, start-ups are paradoxically able to borrow less because their net burden is simply becoming too high. The government gives with one hand (transfer tax exemption), but takes with the other hand (lower HRA).

The “Tax penalty” for higher interest rates

Although we hope for stable interest rates in 2026, the peaks of recent years are still fresh in our minds. At a low interest rate (like the 1% of yesteryear), the disadvantage of a limited deduction was not too bad. But at the current market interest rates of 2026, the hit is harder.

Warning: The higher the interest you pay, the greater the absolute amount that you are no longer allowed to deduct. This makes home owners extremely vulnerable to interest rate fluctuations. A 1% increase in market interest rates will translate almost immediately to a 1% increase in your net expenses in 2026, because the tax authorities will hardly contribute to that additional interest burden.

The impact on different groups (2026)

Target group main disadvantage fiscal impact

Starters  Lower maximum mortgage High; own money deposit must increase

Instantaneous water heaters Excess value is' eaten 'by higher net costs; Average; less space for a larger home

High incomes  Biggest loss in deduction Very high; effective tax rate rises

Seniors  Small mortgage, so little effect Negligible

Slope growth between buying and renting

Another disadvantage of the low mortgage interest deduction is that it clouds the line between buying and renting. Previously, buying was almost always financially advantageous due to the enormous tax subsidy. In 2026, we will see that in certain regions, the net monthly costs of a home for sale (including maintenance and taxes) will be dangerously close to rents in the free sector.

Without the strong HRA incentive, many doubters wonder: “Why should I bear all the risks of maintenance and foundation problems if the government barely encourages my home ownership anymore?” In the long term, this could lead to a less liquid housing market.

Limiting the “Sustainability space”

By 2026, sustainability will be mandatory for almost every buyer. Whether you go for label A++++ or bring an old home to label C, you need financing. Because the interest on these additional sustainability loans is also less deductible, financing a heat pump or extra insulation will become net more expensive.

How will you deal with this as a buyer in 2026?

Despite these drawbacks, there is no need to panic, provided you adjust your strategy.

• Focus on repayment: Now that the tax authorities contribute less to your interest, it becomes more profitable to make extra payments. The less debt, the less interest you pay that you can barely deduct anyway.
• Using source data: Use tools like iWize to make a realistic forecast of your net income over 10 years. Take into account a further austerity of the HRA; after all, the political trend is irreversible.
• Annuity vs. Linear: In 2026, we will more often recommend a linear mortgage. Because the tax subsidy is already low anyway, you'd better reduce your debt as soon as possible to minimize the total interest burden over the entire term.

The risk of the “Home lump sum trap”

In 2026, we will see a dangerous intersection: while the HRA falls, the home lump sum (the tax you pay on owning your home) will remain. Previously, you crossed these two off against each other and had a nice amount of money left over. Nowadays, with a low mortgage debt, it is possible that the lump sum is almost as high as the deduction. The “Hillen act”, which previously dampened this effect, was almost completely phased out in 2026.

Expert tip: Always calculate your “net tax benefit”. Many buyers still think they are getting money from the tax authorities, while in reality, on balance, they hardly benefit from the combination of a low deduction rate and the home lump sum.

The insight

The low mortgage interest deduction in 2026 is the “new reality”. It forces homeowners to become more financial self-reliant and less dependent on tax presents. The disadvantages are clear: higher net costs, less borrowing capacity and greater sensitivity to interest rate fluctuations.

However, this development also ensures a fairer market where house prices are less artificially inflated through tax breaks. As a buyer in 2026, you simply have to count on “real money” instead of fiscal dream scenarios.