Thank you so much @RaifH. This calculates the deductible amount as intended in the Mortgage interest deduction worksheet!
From the perspective of the intent of the IRS law though, I am puzzled as to why adding a mortgage would result in a reduction of the total deductible amount. I understand why the worksheet calculates it that way, but I would imagine that increasing mortgage interest paid would eventually result in an increase of the deductible amount or no change if you hit the limit...
