The mortgage industry got a boost that could help make home ownership more affordable. Mortgage insurance premiums are once again tax deductible. This year the budget reconciliation package made the tax deduction permanent.
In 2007 MI premiums became tax deductible as part of a temporary tax deduction. It was extended multiple times by Congress before expiring in the 2021 tax year. The new provision makes MI premiums a permanent part of the tax code. So now you don’t have to wait to see if you can deduct MI premiums, they are here to stay!
Qualified borrowers can begin claiming the deduction on their 2026 tax returns. This gives lenders and borrowers time to prepare and understand how to take full advantage of the benefit.
Borrowers with an adjusted gross income of up to $110,000 are eligible. The issue that may effect borrowers is that they have to itemize to take the deduction. My suggestion is to talk with a tax professional to determine what is best for your situation.
This can mean savings for you. From 2007-2021, USMI (U.S. Mortgage Insurers) found that when MI premiums were deductible:
- Homeowners claimed $64.7 billion in MI deductions
- The deduction was used 44.5 million times
- One average, 3.4 million homeowners claimed it each year
- Qualified taxpayers received an average deduction of $1,454
Mortgage insurance is needed on conventional loans when you put less than 20% down. It is also required on all FHA loans. The amount varies on conventional loans based on your down payment and credit scores.
Talk to your loan officer about how this can affect you and remember to reach out to your tax professional when it comes time to file your taxes.
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
