What is a home acquisition loan?

Within the context of deductible interest expenses (where you are itemizing your deductions, rather than taking the standard deduction), home acquisition loans are those mortgages taken out after October 13, 1987 and which were used to buy, build or improve your primary residence or a second home. You can generally deduct interest related to such a loan if the loan is for less than $1,000,000 (or $500,000 if you are married and filing separately).