Keep More Cash With the Permanent 2026 Mortgage Insurance Deduction

Lower your tax bill by deducting your mortgage insurance premiums starting in 2026. This permanent change helps many homeowners save money on their yearly tax returns. Follow these guidelines to see if you qualify for this tax break.

Understanding Mortgage Insurance Premiums

Lenders require mortgage insurance if you put down less than 20% on a home.

  • PMI (Private Mortgage Insurance): Conventional lenders charge 0.5–1.5% of the loan balance yearly.
  • MIP (Mortgage Insurance Premium): FHA loans require both upfront and annual insurance premiums.
  • Other Fees: The deduction also covers the VA Funding Fee and USDA Guarantee Fee.

The History of This Deduction

Congress first created this deduction in 2006. It expired after 2021 following years of extensions. The OBBBA now makes this deduction permanent under §163. It treats these premiums just like home mortgage interest.

Do You Qualify?

Follow these 3 rules to claim this deduction in 2026:

  1. You must itemize deductions instead of taking the standard deduction.
  2. The insurance must apply to your primary residence or 1 additional qualified home.
  3. Your AGI must stay below $100,000 for single filers or $50,000 for married filing separately.

The deduction phases out completely once your AGI hits $110,000 or $55,000 respectively. This benefit focuses on moderate-income homeowners.

Impact on SALT and AMT

  • SALT: California homeowners near the $40,000 SALT cap gain an extra itemized deduction here.
  • AMT: You can deduct this mortgage interest even under AMT rules. This makes it more useful than the SALT expansion for many taxpayers.

Calculate Your Potential Savings

Assume a $400,000 loan with 1% PMI, which equals $4,000 in annual premiums. In the 22% tax bracket, you save roughly $880 per year. This provides meaningful relief for first-time buyers and FHA borrowers.

Are you claiming every deduction you're entitled to? Let us review. Book a call →