only the interest related to the $430,000 is tax deductible as it is 'acquisition debt'. The interest related to the remaining $195,000 is not tax deductible (assuming none of it was used to significantly improve your current home). So $430/ $625 or 68.8% is deductible; the rest is not, As you pay down the principle, the percentage will go up as the numerator ($430) will stay the same while the denominator (the $625) will continue to go down.
Even if you were to now buy a 2nd home with the $195,000 it still would not be tax deductible as the law requires the loan to attached to the same residence. You'd violate that rule. Rather, if you bought a 2nd home and borrowed $195,000 against that home and then turned around and used the $195,000 in the bank to pay down the loan against your primary house, you'd be back in compliance with the rule.
