Private mortgage insurance is tax deductible again beginning with the 2026 tax year, and the deduction is now permanent for the first time since Congress created it. If you itemize on Schedule A, your mortgage was taken out to buy, build, or improve your home, and your adjusted gross income falls below the phase-out cutoff, you can treat qualifying PMI premiums as deductible mortgage interest on your federal return. The One Big Beautiful Bill Act, signed on July 4, 2025, reinstated the write-off and removed the sunset clause that had forced Congress to renew it every few years.
When the Deduction Applies
The reinstated deduction covers tax years beginning after December 31, 2025. You’ll first claim it on the return you file in spring 2027 for the 2026 tax year, and every year after that without waiting for another extension.
The gap years are not covered. Premiums paid during 2022, 2023, 2024, and 2025 remain non-deductible. Congress did not make this change retroactive, so there is no amended return to file for those years.1Office of the Law Revision Counsel. 26 USC 163 – Interest
Who Qualifies
Several conditions have to line up before the deduction does you any good.
- You itemize deductions on Schedule A. The PMI write-off only helps if your total itemized deductions beat the standard deduction, which for 2026 is $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for heads of household.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- The mortgage is acquisition debt on a qualified residence. That means you took the loan out to buy, build, or substantially improve your primary home or one second home. A cash-out refinance used to pay off other debt doesn’t qualify.
- The mortgage insurance contract was issued on or after January 1, 2007.1Office of the Law Revision Counsel. 26 USC 163 – Interest
- Your AGI is below the phase-out ceiling. This is the condition that eliminates the most taxpayers.
The Income Phase-Out
The deduction begins shrinking once your adjusted gross income exceeds $100,000, or $50,000 if you’re married filing separately. For every $1,000 above the threshold (rounding any partial thousand up to the next full one), you lose 10% of the deduction. It disappears entirely at $109,000 AGI, or $54,500 for married filing separately.1Office of the Law Revision Counsel. 26 USC 163 – Interest
Here’s how the math works. Say you paid $2,400 in PMI and your AGI is $103,500. You’re $3,500 over the threshold, which rounds up to four $1,000 increments. Four increments times 10% equals a 40% reduction, so your deduction is $1,440.
These thresholds aren’t indexed for inflation, so more households cross them every year. If your AGI sits just above the line, extra pre-tax retirement or health savings account contributions can pull you back under.
How to Claim It
Your mortgage servicer does most of the reporting work. Each January they send Form 1098, and Box 5 shows the mortgage insurance premiums you paid for the year.3Internal Revenue Service. Instructions for Form 1098
Move that Box 5 figure to the home mortgage interest section of Schedule A. If your AGI is $100,000 or less, enter the full amount. If you’re in the phase-out range, run the calculation above and enter the reduced number.4Internal Revenue Service. About Schedule A (Form 1040), Itemized Deductions
If your total premiums came in under $600, your lender may not issue a 1098 at all. You can still claim the deduction from your own records; the $600 figure is the lender’s reporting trigger, not your eligibility floor.
FHA, VA, and USDA Loans
The term “PMI” technically applies to conventional loans, but the deduction covers mortgage insurance from federal programs on the same terms. Premiums paid to the Federal Housing Administration, the Department of Veterans Affairs, and the USDA Rural Housing Service all qualify.3Internal Revenue Service. Instructions for Form 1098
FHA loans carry both an upfront premium (typically 1.75% of the loan amount) and an annual premium built into the monthly payment. Both are deductible under the same rules, including the AGI phase-out. An upfront premium that covers future years must be spread across the coverage period rather than deducted all at once.
VA loans don’t charge monthly mortgage insurance, but most borrowers pay a one-time funding fee at closing. That fee becomes deductible starting with the 2026 tax year for veterans, service members, and surviving spouses who bought using a VA-backed loan.5VA News. Home Loan Borrowers Can Now Deduct Funding Fees
Rental Property Is Different
PMI on a rental property has always been deductible as an ordinary business expense, and it stayed that way straight through the 2022 to 2025 gap when the personal deduction was unavailable. You report it on line 9 of Schedule E, not Schedule A, and it isn’t subject to the AGI phase-out.6Internal Revenue Service. Rental Expenses 1
If you paid a single upfront premium covering multiple years, only the portion tied to the current tax year is deductible now. The remainder is allocated across the coverage period.
Cutting the Premium Instead of Deducting It
A deduction softens the cost of PMI; canceling it removes the cost. On a $300,000 conventional loan, PMI commonly runs from $115 to $375 per month depending on credit and down payment. The federal Homeowners Protection Act gives conventional borrowers two routes to end it.7Consumer Financial Protection Bureau. When Can I Remove Private Mortgage Insurance (PMI) From My Loan
You can request cancellation once your balance reaches 80% of the home’s original value, meaning the lower of the purchase price or the appraised value at closing. Your servicer must approve if you have no payments 60 or more days late in the past two years, none 30 or more days late in the past year, and you can show the property hasn’t lost value. Automatic termination kicks in at 78% of the original value on your scheduled amortization, provided you’re current on payments. A final backstop terminates PMI at the loan’s midpoint regardless of payment status — 15 years into a 30-year mortgage.
These cancellation rules cover conventional loans only. FHA insurance in particular is much harder to shed: for most FHA loans originated after June 3, 2013, the annual premium lasts the life of the loan when the down payment was under 10%, and 11 years when it was 10% or more. Refinancing into a conventional loan after building 20% equity is typically the only way out.8U.S. Department of Housing and Urban Development. How Long Is MIP Collected for Case Numbers Assigned on or After June 3, 2013