Housing markets across cities in Louisiana, Nevada and Washington also have a significant percentage of loans over this threshold.
And in an ironic twist, the housing market in the Washington, D.C., metro area, where many U.S. government workers and elected officials live, would also be affected by the proposed limit.
Through the end of October, 5.4% of all mortgages closed nationwide (purchase and refinance) had a balance of over $500,000 at origination, according to Attom Data Solutions.
On a state level, Hawaii had the largest percentage of year-to-date 2017 originations over $500,000 at 15.1%, followed by California at 11.5% and Delaware at 9.3%.
It's not just the wealthy that take the mortgage interest deduction. Nearly 33.6 million taxpayers
What's more, the GOP tax plan also calls for removing the deduction for state and local property taxes, which would further increase homeowners' tax obligation.
Here's a look at the 12 housing markets with the largest percentages of mortgages over $500,000. The data, from Attom, is based on metropolitan statistical areas with at least 2,500 closed loans in the first 10 months of the year.
No. 12: San Diego-Carlsbad, Calif.
Total closed loans: 88,934
Share of loans over $500,000: 14.3%
No. 11: Shreveport-Bossier City, La.
Total closed loans: 6,298
Share of loans over $500,000: 14.5%
No. 10: Santa Cruz-Watsonville, Calif.
Total closed loans: 6,045
Share of loans over $500,000: 15.1%
No. 9: Seattle-Tacoma-Bellevue, Wash.
Total closed loans: 88,166
Share of loans over $500,000: 15.6%
No. 8: Reno, Nev.
Total closed loans: 19,176
Share of loans over $500,000: 15.8%
No. 7: Los Angeles-Long Beach-Anaheim, Calif.
Total closed loans: 274,451
Share of loans over $500,000: 16.1%
No. 6: Bridgeport-Stamford-Norwalk, Conn.
Total closed loans: 12,497
Share of loans over $500,000: 16.5%
No. 5: Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V.
Total closed loans: 103,019
Share of loans over $500,000: 17.1%
No. 4: Urban Honolulu, Hawaii
Total closed loans: 20,686
Share of loans over $500,000: 17.9%
No. 3: Summit Park, Utah
Total closed loans: 2,629
Share of loans over $500,000: 18.1%
No. 2: San Francisco-Oakland-Hayward, Calif.
Total closed loans: 102,360
Share of loans over $500,000: 21.1%
No. 1: San Jose-Sunnyvale-Santa Clara, Calif.
Total closed loans: 41,797
Share of loans over $500,000: 27.5%