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Formaldehyde has long been recognized as a hazardous environmental agent highly reactive with DNA. Recently, it has been realized that due to the activity of histone demethylation enzymes within the cell nucleus, formaldehyde is produced endogenously, in direct vicinity of genomic DNA. Should it lead to extensive DNA damage? We address this question with the aid of a computational mapping method, analogous to X-ray and nuclear magnetic resonance techniques for observing weakly specific interactions of small organic compounds with a macromolecule in order to establish important functional sites. We concentrate on the leading reaction of formaldehyde with free bases: hydroxymethylation of cytosine amino groups. Our results show that in B-DNA, cytosine amino groups are totally inaccessible for the formaldehyde attack. Then, we explore the effect of recently discovered transient flipping of Watson-Crick (WC) pairs into Hoogsteen (HG) pairs (HG breathing). Our results show that the HG base pair formation dramatically affects the accessibility for formaldehyde of cytosine amino nitrogens within WC base pairs adjacent to HG base pairs. The extensive literature on DNA interaction with formaldehyde is analyzed in light of the new findings. The obtained data emphasize the significance of DNA HG breathing.