How do I report my HA with no other "church" income?

by confused
(Wisconsin)

We pastor a small church (35 people), and have not ever taken a salary, but had a pre-approved housing allowance (for up to the rental value of our home) if the funds ever became available. In August, 2016, we started taking a $500/mo. HA.

I was told I needed to report the HA on Schedule C, and I can take a deduction for having the church office in my own home.

We own our own home, but it is not completely paid for, so we have a monthly mortgage payment of $852/mo.

Does that create a wash then, and I would not have to pay any SE tax on the $2,500 HA (actually $1,344 after the deduction for business use of our home office).

If I can claim the mortgage payment, where is that entered...on what IRS form?

Do I not need to file a Schedule C?