Deductions & credits

I have a very similar situation here and the software essentially allows me to deduct all of my interest from the 1098s, based on your direction.  My concern is that the start value + end value of the two loans divided by 2 still exceed the $1M mark.  So why doesn't the software reduce the total interest by the % difference here?  Is it because construction loans are treaded differently within Publication 936 here?.