If you are subject to the limits, your deductible interest will be a percentage of the actual interest you paid. This percentage is determined as the ratio between the applicable limits and the total of your average mortgage balance. Your deductible points (after determining whether your points are fully deductible in the year paid or whether they have to be amortized over the life of the loan, according to the rules described under Points) will be subject to the limits in the same manner as your interest, and are calculated based on the same ratio.