The mortgage interest on the loan while it is your personal residence is deductible as part of your itemized deductions on schedule A. The interest is limited by the size of the loan (the maximum amount of interest is on a home loan is the interest on the first $750,000 of indebtedness) but otherwise is fully deductible if it is secured by your home.
So, for your scenario, the interest on the original loan is deductible as is any interest on the loan up to the point of conversion to a rental. All of that goes on schedule A. Then any mortgage interest after it is converted to a rental is deducted on schedule E.
@edwardgibbs
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