Yes, you can deduct PMI on taxes again starting with the 2026 tax year. Private mortgage insurance premiums, FHA mortgage insurance, USDA guarantee fees, and VA funding fees are all treated as qualified residence interest under the reinstated rule, so they can be claimed on Schedule A. The deduction has real limits, though: you have to itemize, your income has to sit below the phase-out, and your mortgage insurance contract must have been issued after 2006.1Office of the Law Revision Counsel. 26 USC 163 – Interest
One boundary before the details: premiums paid during the 2022 through 2025 tax years are not deductible. The original provision under 26 U.S.C. ยง 163(h)(3)(E) expired after December 31, 2021, and the 2025 legislation that brought it back applies to amounts paid or accrued in taxable years beginning after December 31, 2025.2VA News. Home Loan Borrowers Can Now Deduct Funding Fees If you paid PMI during the gap years and didn’t claim it, there’s nothing to amend.
Who Qualifies for the Deduction
Three gatekeeping conditions have to line up before income limits even enter the picture.
The mortgage insurance contract must have been issued after 2006. Policies dating to December 31, 2006, or earlier do not qualify, regardless of what you pay. The cutoff attaches to the original insurance contract date, not to any later refinance.1Office of the Law Revision Counsel. 26 USC 163 – Interest
The property has to be a qualified residence, meaning your primary home or one second home you designate for the tax year. The IRS reads “home” broadly: houses, condominiums, cooperatives, mobile homes, house trailers, and even boats count as long as they have sleeping, cooking, and toilet facilities.3Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction A property used purely for rental income does not qualify. A second home you rent part of the year can still work if it meets the personal-use tests.
The insurance must be tied to acquisition indebtedness, meaning debt used to buy, build, or substantially improve the home. For loans taken out after December 15, 2017, acquisition debt eligible for the mortgage interest deduction is capped at $750,000, or $375,000 if you file married filing separately. Because PMI premiums are treated as qualified residence interest, they ride inside that same cap.
The Income Phase-Out
Adjusted gross income is where many otherwise-eligible homeowners lose the deduction. The phase-out begins at $100,000 AGI, or $50,000 for married filing separately.1Office of the Law Revision Counsel. 26 USC 163 – Interest
For every $1,000 of AGI above $100,000, or any fraction of $1,000, the deductible amount drops by 10%. In practice:
- AGI of $100,000 or below: full deduction.
- AGI of $103,000: 30% reduction.
- AGI of $107,500: 80% reduction, because any fraction of $1,000 counts as a full increment.
- AGI above $109,000: no deduction at all.
Married filing separately uses $500 increments instead of $1,000, so the phase-out runs from $50,000 to $54,500. Separate filers lose the benefit in half the distance.1Office of the Law Revision Counsel. 26 USC 163 – Interest
AGI here is your total adjusted gross income before itemized deductions: wages, investment income, retirement distributions, side income. If you’re close to the threshold, above-the-line moves like a traditional IRA or HSA contribution can lower AGI and preserve more of the deduction.
What Kinds of Mortgage Insurance Count
The rule reaches past conventional PMI to the federal loan programs.
FHA loans carry an upfront mortgage insurance premium of roughly 1.75% of the loan amount, plus annual premiums paid monthly. Both portions qualify. The upfront premium generally has to be spread over 84 months rather than deducted all at once.
VA loans don’t technically involve mortgage insurance, but the one-time funding fee, which runs from 0.5% to 3.3% of the loan amount depending on down payment and prior use of the VA benefit, is deductible under the same provision starting in 2026.2VA News. Home Loan Borrowers Can Now Deduct Funding Fees
USDA loans charge a guarantee fee that behaves like mortgage insurance and qualifies under the same rules.
Will Itemizing Actually Help You
The deduction only reaches your return if you itemize on Schedule A. If the standard deduction is larger than your total itemized deductions, itemizing costs you money.3Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction
Standard deduction amounts for 2026:4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
- Single: $16,100
- Married filing jointly: $32,200
- Head of household: $24,150
- Married filing separately: $16,100
To clear those figures, add your mortgage interest, PMI, state and local taxes (capped at $10,000), charitable contributions, and other qualifying costs. A joint-filing couple with $24,000 of mortgage interest, $2,400 of PMI, $10,000 of state tax, and $1,500 of giving reaches $37,900, beating the $32,200 joint standard deduction by $5,700. That $5,700 gap is the real benefit. Fall short of the standard deduction, and the PMI line means nothing.
Upfront and Prepaid Premiums
A lump-sum premium paid at closing is handled differently from monthly premiums. Upfront amounts have to be spread over the shorter of the mortgage term or 84 months, and you deduct only the portion attributable to the current tax year.
If you paid $8,400 in upfront FHA insurance on a 30-year loan, dividing by 84 months gives $100 per month, or $1,200 in a full calendar year. Close in September, and only four months, or $400, is deductible in year one. Sell or refinance before the 84 months run out, and the remaining unamortized balance is deductible in the year the loan ends. Keep your closing disclosure so you can track the schedule.
How to Claim It on Your Return
Your mortgage servicer issues Form 1098 (Mortgage Interest Statement) each January. Box 5 shows the total mortgage insurance premiums paid during the prior calendar year, and that’s the figure you use on your return.5Internal Revenue Service. Instructions for Form 1098 If Box 5 is blank and you know you paid, call the servicer before filing. Upfront premiums being amortized often won’t appear on Form 1098 in later years, so calculate those yourself from the closing documents.
From there:
- Confirm your AGI on Form 1040 and, if it’s over $100,000 ($50,000 MFS), apply the phase-out to figure the reduced amount.
- Enter the deductible premium on Schedule A in the mortgage interest section, on the line for mortgage insurance premiums.
- Total Schedule A and compare against your standard deduction. Itemize only if Schedule A wins.
- Carry the Schedule A total onto Form 1040.
Hold onto Form 1098, the closing disclosure, and the loan origination paperwork for at least three years after filing. The origination date on the closing documents is what proves the insurance contract post-dates 2006 if the IRS ever asks.
When PMI Ends and the Deduction Stops Mattering
The deduction only helps while you’re still paying premiums. For conventional loans with private mortgage insurance, the Homeowners Protection Act sets two milestones based on the home’s original value at origination:6National Credit Union Administration. Homeowners Protection Act (PMI Cancellation Act)
- At 80% loan-to-value, you can submit a written request to cancel PMI if your payment history is good and the property hasn’t lost value.
- At 78% loan-to-value, the lender must terminate PMI automatically based on the amortization schedule, as long as you’re current.
Extra principal payments get you to 80% faster and cut off the premiums sooner. FHA loans follow different rules: if you put down less than 10%, mortgage insurance typically stays for the life of the loan, which means FHA borrowers keep the deductible expense far longer than most conventional borrowers.