I don't think you can deduct the interest on the margin loan. The rules are fairly simple. The margin loan funds must be used for investment and not for use. Putting a down payment on a primary residence is certainly personal use.
If you have $10K in your checking account and a $440K investment portfolio, and you need to make a $90K down payment, it works like this:
(1) Sell $80K in assets, and use the proceeds, on top of your checking account balance to make a wire transfer.
(2) Now you have $360K in your investment account. You take a margin loan out in the amount of $80K.
(3) Use that $80K to re-establish your $440K investment portfolio.
You haven't used your margin loan to make a down payment, you've sold your assets and used the proceeds to make a down payment. You've then re-taken your investment position using a margin loan. The margin loan isn't collateralizing your down payment, it's making up for a reduction in the net liquidation value of your investment account as a result of your having used it to make a down payment, allowing you to retain your the prior level of exposure to equities in your trading account.
You don't have to go through the actual song and dance, and re-taking your equity positions would result in an IRS wash sale anyways, but that's why withdrawing cash on margin to make a down payment means the margin loan remains an investment expense -- it's there to allow you to retain your desired level of exposure to equities.
