interest allocation of mixed use mortgage

I am having a tough time with IRS Pub 936, their definitions and their worksheets

 

I did a refi of my primary home in 2022 and took cash out and used the money for a rental home refi. So this is called mixed -use mortgage.  A portion is home acquisition debt and a portion is home equity debt used for investment (?).  Assume that everything is less that the $1M limit and is not grandfathered debt before 1987.

 

Say that  I did the refi Jan 1 (to make it simpler), the new loan was $500k, and $150k was applied as home acquisition debt and $350k was applied to the rental home.  The original mortgage for the home acquisition was $400k. 

 

According to pub 936, I first need to figure out in Part I worksheet, the maximum loan amount I can attribute to home acquisition debt.  That seems straightforward. Since the refi, I had $150k of home acquisition debt, that is the amount I ccan get on line 11 as the qualified loan limit.  (Pub 936 says I need to pay off the non-acquisition debt first, so all my principle payments go to paying off the $350k, so in 2022, I havent paid any principle from the $150k of home acquisition debt.)

 

Part II, deductiible home mortgage interest is where I can stuck.  

I would think that what makes sense is that the amount of interest I can attribute to the home mortgage to put on Sch A would be the interest rate X $150k and the remainder would be on Sch E such that the sum is what is reported on the 1098.  But that isnt how the part II worksheet says.  Line 12 says to use the mixed use mortgage instructions, which say to add grandfathered debt and home acquisition debt and enter in line 12.  Since the $150k hasnt changed, that is entered in line 12. Then it says if this is the same as the qualified loan limit (which it is), then all the interest is deductibe as home mortgage in Sch A.  This doesnt make sense.  It would make sense if line 12 included the home equity portion but pub 936 specifically doesnt include that.

 

What dont I understand or is Pub 936 wrong for line 12?