Yes, 80000 of Acq debt and 20000 of credit card debt. What you keep forgetting is 1.163-8T(d), which gives an ORDER for reducing mixed mortgage principal. Now, put that together with "interest follows principal," which you apparently agree with. The first $20000 of principal needs to be paid off before a penny of that interest is deductible. All the interest on the first $20000 of principal is non-deductible. What part of that is confusing? There is nothing about "percentages" in the regulations, and Publication 936 talks about not using the table. That's because interest is tied to principal. Home equity interest is tied to home equity debt. Non of the interest is deductible, and there is an order to follow. I am through. Have a nice life.