If you have claimed the Mortgage Interest Credit on Form 8396 on the federal return, your home mortgage interest from Form 1098 is reduced on federal Schedule A by the amount of the credit. The credit is generally 20% of the interest paid on the certified indebtedness.
Per the Montana Department of Revenue, it is part of the general application of 15-30-121, MCA which ties Montana deductions to those allowed under the federal code. The federal code says you can't deduct the 20% because you used it for the credit, so you can only deduct the 80% on the Montana return (even though there's not a similar state tax credit).
Therefore, the home mortgage interest on line 13 of the Montana Schedule III Itemized Deductions will be the amount allowed on line 10 mortgage interest of federal Schedule A.
If you have further questions we would suggest contacting the Montana Department of Revenue at the MT Call Center, (866) 859-2254.