The mortgage insurance premium shown in Box 5 of your Form 1098 is deductible as mortgage interest on Schedule A of your federal return, starting with the 2026 tax year. To claim the Form 1098 mortgage insurance premium deduction you have to itemize, your adjusted gross income has to fall under a phase-out threshold, and any upfront premium paid at closing generally has to be spread across up to 84 months rather than deducted all at once. Congress made this deduction permanent in the One Big Beautiful Bill Act signed on July 4, 2025, effective for tax years beginning after December 31, 2025.1Office of the Law Revision Counsel. 26 USC 163 Interest
What Counts as Qualified Mortgage Insurance
The amount in Box 5 can include several kinds of insurance, and all of them are treated the same way for the deduction:2Internal Revenue Service. Instructions for Form 1098 (Rev. December 2026)
- Private mortgage insurance (PMI) on conventional loans, typically required when the down payment is under 20 percent.3Consumer Financial Protection Bureau. What Is Private Mortgage Insurance?
- FHA mortgage insurance premiums (MIP), including the upfront premium collected at closing and the ongoing monthly premium.4U.S. Department of Housing and Urban Development. Single Family Upfront Mortgage Insurance Premium (MIP)
- VA funding fees on VA-backed home loans, which range from 1.25 percent to 3.3 percent of the loan amount depending on the down payment and prior use of the benefit.5Veterans Affairs. VA Funding Fee and Loan Closing Costs
- Rural Housing Service guarantee fees on USDA-backed loans.
One threshold rule applies across the board: the insurance contract has to have been issued after December 31, 2006. Premiums on a policy older than that don’t qualify, no matter what appears on your 1098.1Office of the Law Revision Counsel. 26 USC 163 Interest
Income Limits That Reduce or Eliminate the Deduction
The deduction phases out based on adjusted gross income. If your AGI is $100,000 or less ($50,000 or less for married filing separately), you can deduct the full Box 5 amount you’re otherwise entitled to.1Office of the Law Revision Counsel. 26 USC 163 Interest
Above that, the deductible amount drops by 10 percent for every $1,000 of AGI over $100,000 ($500 for married filing separately). Any fraction of a $1,000 increment counts as a full increment, so an AGI of $100,001 already triggers the first 10 percent cut. The deduction reaches zero at $109,000 of AGI, or $54,500 for married filing separately.1Office of the Law Revision Counsel. 26 USC 163 Interest
An example. You paid $2,400 in premiums during 2026, and your AGI comes in at $105,000. That’s $5,000 above the threshold, or five $1,000 increments, so your deduction is cut by 50 percent. You’d deduct $1,200.
Upfront and Prepaid Premiums: The 84-Month Rule
This is where the Box 5 figure often can’t just be copied onto your return. If you paid a lump-sum or upfront premium at closing, which is standard on FHA loans and some private policies, you generally can’t deduct the whole thing in the year you paid it. The premium has to be spread over the shorter of the mortgage term or 84 months, beginning with the month the insurance was obtained.6Federal Register. Allocation of Mortgage Insurance Premiums
Suppose you closed on an FHA loan in March 2026 and paid a $3,500 upfront MIP. Allocated over 84 months, that’s about $41.67 per month. For 2026 you’d deduct 10 months’ worth (March through December), or roughly $417. The remainder carries into future years.
Two exceptions matter. VA funding fees and Rural Housing Service guarantee fees are not subject to the 84-month allocation and can be deducted in full in the year paid.2Internal Revenue Service. Instructions for Form 1098 (Rev. December 2026) And if you pay off an FHA or PMI loan early, any unallocated balance of a prepaid premium is lost. There’s no catch-up deduction in the final year.
Because Box 5 may fold prepaid amounts into the reported total, check with your servicer or review your closing disclosure before assuming the reported number equals your deductible amount. If Box 5 doesn’t match what you expect, ask for a corrected form before you file.
Claiming It on Schedule A
The deduction lives on Schedule A of Form 1040, which means you have to itemize instead of taking the standard deduction.7Internal Revenue Service. About Schedule A (Form 1040), Itemized Deductions The line for mortgage insurance premiums was marked “reserved” during the years the deduction was unavailable, so confirm the current line number on the 2026 version of Schedule A when the IRS releases it. The Schedule A instructions typically include a worksheet for the AGI phase-out; run that calculation before entering your final number.
Itemizing is only worthwhile if your itemized total beats the 2026 standard deduction for your filing status:8Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- Married filing jointly: $32,200
- Head of household: $24,150
- Single: $16,100
- Married filing separately: $16,100
Mortgage insurance premiums by themselves rarely clear those thresholds. Added to the mortgage interest in Box 1 of the same 1098, property taxes, state income taxes, and charitable contributions, they often do, especially for recent homebuyers.
The Property Has to Be a Qualified Residence
The loan the insurance is attached to has to be secured by a qualified residence, meaning your primary home or one second home that isn’t operated as a rental business.1Office of the Law Revision Counsel. 26 USC 163 Interest Refinances stay eligible as long as the new mortgage doesn’t exceed the balance of the original loan and remains secured by the same property. If you took cash out above the prior balance, only the premium allocable to the original loan amount qualifies.