You can claim the mortgage insurance premium deduction again starting with tax year 2026, treating qualifying premiums as home mortgage interest on Schedule A. The One Big Beautiful Bill Act, signed July 4, 2025, reinstated the deduction and made it permanent after it had been dead for tax years 2022 through 2025. The same income-based phase-out that applied before still governs it: the deduction begins shrinking once your adjusted gross income passes $100,000 and disappears entirely at $109,000 for most filers.
What Counts as Qualifying Mortgage Insurance
The deduction covers more than just conventional PMI. Four categories of premium qualify:
- Private mortgage insurance on conventional loans, typically required when you put down less than 20 percent.1Consumer Financial Protection Bureau. What Is Private Mortgage Insurance
- FHA mortgage insurance premiums, including the upfront premium at closing and the annual premiums.
- The VA funding fee on loans guaranteed by the Department of Veterans Affairs.
- The USDA guarantee fee on Rural Housing Service loans, both upfront and annual.
All are treated identically under the tax code as qualified mortgage insurance deductible as interest.2Office of the Law Revision Counsel. 26 USC 163 – Interest
The insurance contract must have been issued on or after January 1, 2007. Older policies don’t qualify regardless of your income or loan type. The underlying loan must also be acquisition debt: money borrowed to buy, build, or substantially improve the home securing it, and the home must be your primary residence or one qualified second home.
Refinanced loans can qualify, but only up to the remaining balance of your original acquisition debt at the time of the refinance. Cash pulled out in a refinance doesn’t count as acquisition debt unless you use it to substantially improve the property. Homeowners commonly stumble here: they refinance for $50,000 more than they owed, spend it on something unrelated to the home, and assume the whole loan still qualifies. It doesn’t.
The Income Phase-Out
The full deduction is available if your AGI is $100,000 or less, or $50,000 if you’re married filing separately. Above that, the deductible amount drops by 10 percent for every $1,000 of additional income, and the statute rounds up to each full $1,000 increment.2Office of the Law Revision Counsel. 26 USC 163 – Interest
Here’s how that math plays out. Say you paid $3,000 in PMI premiums during the year and your AGI is $104,500. You’re $4,500 over the threshold, which rounds up to $5,000. That’s a 50 percent reduction, so you’d deduct $1,500 instead of $3,000.
The deduction vanishes completely at $109,000 for most filers and $54,500 for married filing separately. That cutoff hasn’t been indexed for inflation since 2007, so it catches a growing share of homeowners each year. If your household income is anywhere near this range, run the phase-out calculation before counting on the deduction.
Upfront and Prepaid Premiums
FHA loans charge an upfront premium at closing, often financed into the loan balance. The VA funding fee and USDA guarantee fee work the same way. When premiums are prepaid or financed rather than paid monthly, you generally cannot deduct the whole amount in the year you closed. The deduction is spread over the shorter of the mortgage term or 84 months.
So a $10,000 upfront FHA premium on a 30-year mortgage produces roughly $1,190 in deductions per year for seven years, not a $10,000 write-off in year one. If you refinance or sell before the seven years are up, you can deduct the remaining unamortized balance in the year the loan terminates. This one is easy to miss because it won’t show up on that year’s Form 1098.
Will Itemizing Actually Help You
The deduction only reaches your return if you itemize on Schedule A instead of taking the standard deduction. For 2026, the standard deduction is $32,200 for married couples filing jointly, $16,100 for single filers and married filing separately, and $24,150 for heads of household.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
Those thresholds are high. A married couple paying $2,400 in PMI, $12,000 in mortgage interest, $10,000 in state and local taxes, and $2,000 in charitable contributions totals $26,400 in itemized deductions. That falls $5,800 short of the $32,200 standard deduction, which makes itemizing a losing move despite the substantial expenses. The PMI deduction only delivers value when your other itemized deductions already put you over the standard deduction, or close enough that adding PMI tips the balance.
Single filers have better odds. The same expenses would clear the $16,100 standard deduction comfortably. Run your own numbers before assuming the deduction saves you anything.
Finding Your Premium Amount on Form 1098
Your mortgage servicer reports the insurance premiums you paid in Box 5 of Form 1098, the Mortgage Interest Statement. Lenders must send this form by January 31.4Internal Revenue Service. Instructions for Form 1098
Watch for one catch. Lenders are only required to fill in Box 5 if you paid $600 or more on that specific mortgage during the year. The threshold is per-mortgage, not per-borrower. If your PMI runs $45 a month ($540 for the year), your lender has no obligation to report it, and Box 5 may be blank even though you paid qualifying premiums.4Internal Revenue Service. Instructions for Form 1098 You can still claim the deduction; you’ll just need to pull the amount from monthly statements or your servicer’s online portal.
If Form 1098 hasn’t arrived or the figures look wrong, contact your loan servicer directly. Keep the form with your completed return for at least three years after filing.
How to Claim It on Your Return
You claim mortgage insurance premiums on Schedule A of Form 1040 as part of your itemized deductions. Because the deduction was expired for several years, the IRS had marked Line 8d of Schedule A as “reserved for future use.”5Internal Revenue Service. Instructions for Schedule A (Form 1040) The IRS will update the 2026 forms to accommodate the reinstated deduction, and has also introduced a new Schedule 1-A for additional deductions created by the One Big Beautiful Bill Act, so watch for the updated instructions when they’re released and confirm which line applies.
If your AGI falls within the phase-out range, you’ll reduce the amount before entering it on the form. Tax software handles the calculation once you enter your income and the Box 5 figure. Paper filers can use the worksheet in the Schedule A instructions to walk through the reduction step by step. You’ll need your W-2s, 1099s, and other income documents to pin down AGI, since that number decides how much of your premiums you can actually deduct.
When Your PMI Ends
The deduction only helps while you’re still paying mortgage insurance, and federal law gives you tools to end PMI sooner than many homeowners realize. Under the Homeowners Protection Act, you can request cancellation of PMI on a conventional loan once your balance reaches 80 percent of the home’s original value, provided you have a good payment history and the property value hasn’t declined.6Federal Reserve. Homeowners Protection Act of 1998
Even without a request, your servicer must automatically terminate PMI once the balance is scheduled to hit 78 percent of the original value, as long as you’re current on payments. A final backstop applies if PMI somehow survives past the midpoint of your loan’s amortization schedule; the servicer must terminate it then.6Federal Reserve. Homeowners Protection Act of 1998
FHA loans work differently. Most FHA mortgages originated after June 2013 with less than 10 percent down carry mortgage insurance for the life of the loan. The only way to drop it is to refinance into a conventional loan once you have enough equity. For those borrowers, the deduction can be available for as long as they hold the FHA loan.