Fact Checked
Is Mortgage Insurance (PMI or MIP) Tax Deductible?
If you're filing your current tax return, the honest answer is no. That answer's about to flip. The deduction for private mortgage insurance and FHA mortgage insurance premiums expired, then Congress revived it starting next year, and knowing when the switch happens keeps you from claiming a deduction that gets rejected or missing one you finally qualify for.
Key Takeaways
- The mortgage insurance deduction is expired for the return most people are filing right now.
- Congress restored the deduction on a forward-looking basis, effective for the next tax year.
- The deduction only applies if you itemize on Schedule A instead of taking the standard deduction.
- Lenders report your annual premium total in Box 5 of Form 1098.
- Higher earners phase out of the deduction once it becomes available again.
The Timing Trap Most Filers Walk Into
The first question to settle is which return you're actually sitting down with, because it decides everything else here. If you're filing for the current tax year, the one due this spring, the rule works one way. If you're asking about a future return, one you haven't filed yet, it works another. Get that answer wrong and you get the deduction wrong.
For the current return, the one most people are filing right now, the answer is simple: mortgage insurance premiums aren't deductible. Not PMI on a conventional loan. Not FHA's upfront or annual mortgage insurance premium. The IRS's own guidance for this filing season states plainly that the itemized deduction has expired and can no longer be claimed.
That single sentence trips up a lot of homeowners. I get why. Search around online and you'll find plenty of coverage announcing the deduction is "back." That's true in the bigger picture, but misleading for the return sitting on your desk today. Restoration and effective date are two different things. The headline covers the first. The filing rule you actually need depends on the second, and that's the fine print worth reading before you claim anything.
How a Deduction Can Expire, Then Come Back
This isn't the first time this tax break has flickered on and off. The pattern is exactly why you double-check every filing season instead of assuming last year's rule still applies. The deduction started out treating mortgage insurance premiums the same way as mortgage interest. Then it lapsed. Got revived retroactively, more than once. Then expired again for premiums paid after a set cutoff date.
The most recent development is the One Big Beautiful Bill Act. It amends the tax code section governing mortgage interest and mortgage insurance premiums, striking the prior expiration language and putting the deduction back on the books, but on a going-forward basis. The restoration starts with the next taxable year. The current return due right now still falls under the expired rule. That effective date carries real weight: claim the deduction too early and risk a rejected line item; miss it once it's available and you leave real money on the table.
What Changes Once the Deduction Is Back
Once you reach a qualifying tax year, mortgage insurance premiums are treated as qualified residence interest, the same category as your mortgage interest deduction. A few things stay true regardless of the year.
You have to itemize on Schedule A. If you take the standard deduction, the more common choice today, there's nothing to claim here. This is the same qualifying test that determines whether your mortgage interest deduction helps you, so run the math before assuming either applies.
Your lender does the tracking for you. Mortgage insurance premiums of $600 or more paid during the year show up in Box 5 of your Form 1098, the same statement that reports your mortgage interest, so you don't have to reconstruct the figure from monthly statements.
The premium type has little bearing on eligibility. Conventional PMI, FHA mortgage insurance premiums, VA funding fees, and USDA guarantee fees can all potentially qualify once the deduction is active, because the tax code treats them under one mortgage insurance premium framework rather than singling out conventional loans.
Two limits survive into the restored deduction, and neither is new. The mortgage insurance contract has to have been issued after a cutoff date set years ago, which rules out almost no current homeowner. The second limit is the one that actually separates who benefits from who doesn't: an income phaseout that, under the prior version of this deduction, ran between $100,000 and $110,000 in adjusted gross income, half that range for married filing separately. That range comes from the pre-existing statute Congress carried forward rather than rewrote, so confirm the exact figure with a tax professional or the current IRS instructions before you file on it, in case any adjustment applies by the time the restored deduction takes effect.
That phaseout translates into real dollars once you run the numbers, so treat this as an illustrative example rather than a real filer's figures. Say your mortgage insurance premiums total $1,500 for the year and you fall in the 22% marginal tax bracket. If your adjusted gross income sits under the phaseout band, the math is straightforward: $1,500 in premiums times a 22% marginal rate works out to roughly $330 in tax savings from that one deduction, assuming you itemize and the premiums are fully deductible. Push that same adjusted gross income above the phaseout band, and the deduction shrinks or disappears even though the premium amount and tax bracket didn't change. This is a simplified illustration to show the mechanism, not a substitute for running your own numbers with a tax professional.
If your household income sits above that band, this deduction won't do much for you, and that's a normal outcome for plenty of homeowners. Income below the band works differently. Take an illustrative case: if you had $95,000 in adjusted gross income, a full-time job, and a first home bought with less than 20% down, your income would land under the historical phaseout threshold, meaning the restored deduction could reduce what you owe once it takes effect. The tax code and the mortgage insurance premium stay identical in both cases; only the income figure changes the result. The number on your return decides which outcome is yours, so confirm where the threshold actually sits for the year you're filing.
What to Actually Do Right Now
Focus your energy on the current filing rule rather than the headline about restoration. Don't claim mortgage insurance premiums on your current return. If tax software or a friend tells you otherwise, ask which filing year they mean.
What you can do productively is start tracking the number now. Pull your Form 1098. Note the Box 5 figure every year going forward. That way the documentation is ready once the restored deduction applies, instead of digging through old statements under a deadline. It's the same discipline I push on any financial decision you're working through: get the numbers organized before you need them.
If you're unsure whether itemizing will benefit you once the deduction is live, that's worth working through with a tax professional. Mortgage insurance sits at the intersection of two questions: whether your itemized deductions beat the standard deduction, and whether your income falls under the phaseout threshold. Both have to line up for the deduction to reduce what you owe. Loan officers at AmeriSave field this question constantly from homeowners who assumed the deduction applied the moment they heard it was restored.
IRS: Publication 936, Home Mortgage Interest Deduction (2025 revision), states that the itemized deduction for mortgage insurance premiums has expired for the return currently due and confirms the itemizing requirement under Schedule A.
IRS: About Publication 936 confirms this is the IRS's official guidance document on home mortgage interest and related mortgage insurance premium rules.
Congress.gov / GovInfo: Public Law 119-21 (One Big Beautiful Bill Act, 2025), Section 70108, provides the statutory text restoring the mortgage insurance premium deduction and sets the effective date as taxable years beginning after December 31, 2025.
Cornell Law School Legal Information Institute: 26 U.S.C. Section 163(h)(3) supports the prior-law mechanics of the deduction, including the requirement that the mortgage insurance contract be issued after December 31, 2006, and the adjusted gross income phaseout range.
IRS: Instructions for Form 1098, Mortgage Interest Statement, support the reporting rule that lenders report mortgage insurance premiums of $600 or more in Box 5.
Jerrie leads sales operations in the Dallas-Fort Worth region for AmeriSave, where his entire mortgage career has been spent since being recruited into the industry at age 18. Licensed as a Mortgage Loan Originator in 37 states, he specializes in making complicated loan options accessible and helping borrowers understand what matters most in their individual situations. He brings deep regulatory knowledge and a client-centric approach honed through progression from entry-level to upper management, including successfully onboarding and training 70 people from a closed Cleveland office.
Frequently Asked Questions
No. The itemized deduction for mortgage insurance premiums, covering both conventional PMI and FHA mortgage insurance premiums, has expired for the return currently due. The Internal Revenue Service states this directly in its guidance on home mortgage interest. The deduction doesn't return until the next tax year, and claiming it now risks a correction. If you paid mortgage insurance this year, keep your Form 1098 on file since Box 5 shows the premium total you eventually need.
Yes. The tax code doesn't carve out separate treatment for FHA mortgage insurance premiums versus conventional PMI, VA funding fees, or USDA guarantee fees. All of them fall under one mortgage insurance premium provision treated as qualified residence interest once the deduction is active. The practical difference between FHA and conventional mortgage insurance shows up in cost and cancellation rules; the tax code categorizes both premium types the same way. Either way, the same itemizing requirement and income phaseout apply.
Yes, and this requirement disqualifies more people than the expiration date does. The mortgage insurance premium deduction only exists on Schedule A alongside your other itemized deductions. If you take the standard deduction, which most filers do since it was significantly expanded not long ago, there's no separate way to claim it. Before assuming this deduction will help you, add up your other itemized deductions, mortgage interest, state and local taxes, charitable giving, and see whether the total exceeds your standard deduction amount.
Your lender reports it for you. Mortgage insurance premiums of $600 or more paid during the year appear in Box 5 of Form 1098, the Mortgage Interest Statement your servicer sends annually, the same form that reports deductible mortgage interest in Box 1. Start saving these forms now even though the deduction isn't currently claimable, so you have a complete record once you reach the first tax year the restored deduction covers.
No. Two limits apply on top of the itemizing requirement. The mortgage insurance contract must have been issued after a cutoff date set years ago, which excludes almost no current homeowner. And the deduction phases out for higher earners. Under the prior version of this deduction, that phaseout started around $100,000 in adjusted gross income for most filers and half that for married filing separately, phasing out completely near the top of that range. Congress carried this limit forward rather than rewriting it, so confirm the exact figures with a tax professional or the current IRS instructions before you rely on them, in case any adjustment applies by the time you file. Above the threshold, the deduction won't reduce your tax bill regardless of how much mortgage insurance you paid.
The deduction has never been permanent. It started as a temporary provision, lapsed, was revived retroactively more than once, and expired again for premiums paid after a set date. Tax provisions written with expiration dates require Congress to act again to extend them, and there's often a gap between when one expires and when a new law addresses it. The One Big Beautiful Bill Act most recently restored this deduction, but on a forward-looking basis, which is why the current filing season still falls under the expired rule.
No. Don't let a tax detail drive a housing decision. Mortgage insurance is simply a cost of borrowing with less than a full down payment, and it belongs in your math whether or not the premium happens to be deductible that year. Deductibility affects your after-tax cost at the margins. Whether the purchase makes sense depends on your finances overall. AmeriSave loan officers can walk through the mortgage insurance cost directly, including when it drops off as your equity builds, which matters more to your long-term cost than the tax treatment in any single year.