It depends. You can enter all three 1098s (option 1) or just one (option 2).
While TurboTax uses the average of first and last mortgage balances, you may find a better result using one of the other average mortgage balance calculation methods mentioned in IRS Pub 936 under Average Mortgage Balance. This includes the Interest Rate method you have chosen to use.
Option 1: After you enter all three Forms 1098, if TurboTax finds your mortgage interest deduction is limited, you should be presented with a page that allows you to enter the total interest deduction you calculated. This overrides the amount calculated by TurboTax.
Option 2: If you prefer to enter one 1098 instead, use the lender information for the most recent, active loan. Enter only one 1098 with the interest you have calculated. As long as you can prove your calculations, the other information on the 1098 is not relevant, or reported to the IRS.
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