Is PMI tax deductible in 2026?

The One Big Beautiful Bill Act, signed into law on July 4, 2025, permanently reinstated the tax deduction for mortgage insurance premiums.

The deduction will return for the 2026 tax year, which means income tax filers in early 2027 can start claiming the deduction.

But to claim it, you must itemize your deductions and your total mortgage balance must be $750,000 or less.

...in as little as 3 minutes — no credit impact

The PMI deduction is back, permanently

For tax years 2022 through 2025, homeowners could not deduct premiums paid for private mortgage insurance. The deduction had previously been available from 2007 through 2021, but it expired and Congress did not renew it.

That changed in July 2025. The One Big Beautiful Bill Act made the mortgage insurance deduction permanent. Every premium you've paid since January 1, 2026, is already accumulating toward a deduction you'll claim on your 2026 return, filed in spring 2027.

The deduction covers:

• Private mortgage insurance (PMI) on conventional loans
• FHA mortgage insurance premiums (MIP)
• VA funding fees
• USDA guarantee fees

Under the new law, these fees are treated as qualified residence interest, the same category as your regular mortgage interest deduction, subject to the $750,000 loan balance limit.

When the deduction was previously available, it was claimed 44.5 million times at an average of $1,454 per qualifying taxpayer annually. For many first-time and low-down-payment buyers, this is a meaningful reduction in the true net cost of homeownership.

Who qualifies for the 2026 PMI deduction

To claim the deduction on your 2026 tax return, you must:

• Itemize deductions on Schedule A rather than taking the standard deduction
• Have a total mortgage balance of $750,000 or less ($375,000 or less if married filing separately)
• Have a loan that's secured by your primary residence or one second home (not a rental property)
• Have an adjusted gross income (AGI) below $109,000 (see income phase-out below)

Most borrowers pay PMI when their down payment is less than 20% of the purchase price. If you recently put 3%, 5%, or 10% down on a conventional loan, you are almost certainly paying PMI. If you have an FHA loan, you're paying MIP, which is also covered under the reinstated deduction.

Standard deduction impacts whether to claim PMI deduction

This deduction helps only you if your total itemized deductions exceed your 2026 standard deduction. For the 2026 tax year, the standard deduction is $33,500 for married couples filing jointly and $16,750 for single filers.

If your combined mortgage interest, property taxes, state and local taxes, PMI, and other deductible expenses exceed those thresholds, itemizing (and claiming the PMI deduction) could lower your tax bill.

What if your income is above $100,000?

The deduction begins to phase out once your AGI exceeds $100,000. It reduces by 10% for every $1,000 of income above that threshold, and disappears entirely at $109,000 ($54,500 if married filing separately).

For example, a borrower with an AGI of $104,000 would be eligible for 60% of the full deduction. A borrower at $109,000 or above would not qualify at all.

How much can you actually save?

Every tax situation is different, and it's best to talk to a professional tax advisor about your situation.

In general, savings depend on how much PMI you pay, your tax bracket, and your income. Here are two illustrative scenarios:

Scenario	Annual PMI paid	Tax bracket	Estimated tax savings
$300K loan, 5% down	~$1,800/yr	22%	~$396
$400K loan, 5% down	~$2,400/yr	22%	~$528

Example is for illustrative purposes only. Actual PMI costs, deduction amounts, and tax savings will vary based on loan amount, lender, credit profile, tax bracket, and individual circumstances. Consult a tax advisor for guidance specific to your situation.

These aren't life-changing numbers, but they're real. A $400 to $500 reduction in your tax bill is meaningful, particularly for first-time buyers managing tight budgets in the early years of homeownership.

PMI costs have also become more affordable over time. Industry data shows private mortgage insurance costs have declined about 25% since 2017, even as homeowners insurance and property taxes have each risen significantly. That trend, combined with the restored tax deduction, means the net cost of a low-down-payment strategy is lower than many buyers assume.

PMI vs. FHA MIP: Does the deduction apply to both?

Yes. The One Big Beautiful Bill Act covers both conventional PMI and FHA mortgage insurance premiums, as well as VA funding fees and USDA guarantee fees. The deduction applies regardless of loan type, as long as the income and itemizing requirements are met.

That said, there is an important practical difference between PMI on a conventional loan and MIP on an FHA loan that the deduction does not change.

PMI on a conventional loan cancels automatically once you reach 20% equity in your home, or you can request cancellation at 20%. You stop paying it, and the deduction becomes irrelevant for you, once that threshold is crossed.

FHA MIP, on most loans originated after June 2013, remains for the life of the loan if your down payment was less than 10%. If your down payment was 10% or more, MIP cancels after 11 years.

Should this change how you think about your down payment?

For buyers currently deciding between putting 20% down to avoid PMI and putting less down to preserve cash, the reinstated deduction may shift the calculus.

A buyer who itemizes and has an AGI below $100,000 now has a modest tax offset against their annual PMI cost. That means the effective net cost of PMI is somewhat lower than the stated monthly premium. For some buyers, this makes the argument for a smaller down payment, and keeping more cash in reserves, slightly more compelling than it was when PMI offered no tax benefit.

At the same time, this deduction shouldn't be the primary driver of your down payment decision. PMI still adds to your monthly payment, the deduction phases out above $100,000 in income, and you have to itemize to benefit at all.

...in as little as 3 minutes — no credit impact

How to claim the PMI deduction on your 2026 taxes

The PMI deduction is claimed as part of your mortgage interest deduction on Schedule A of your federal income tax return. Here's what you need to do:

• Check your Form 1098. Your lender is required to report the amount of mortgage insurance premiums you paid during the year in Box 5 of Form 1098, the Mortgage Interest Statement. You'll receive this in early 2027 for the 2026 tax year. Verify the figure matches your payment records.

• Confirm itemizing makes sense. Add up your expected itemized deductions — mortgage interest, property taxes, state and local taxes (subject to the SALT cap), PMI premiums, and any other deductible expenses — and compare the total to the 2026 standard deduction of $33,500 (MFJ) or $16,750 (single). If your itemized total exceeds the standard deduction, itemizing is worth it.

• Keep documentation. Save your monthly PMI billing statements and annual insurance certificate throughout 2026. Your Form 1098 is the primary document, but having your own records provides backup in the event of any discrepancy.

• File in spring 2027. The PMI deduction first appears on your 2026 tax year return. You cannot amend prior year returns (2022–2025) to claim it. The deduction applies only to tax years beginning January 1, 2026 and later.

If you're unsure whether itemizing makes sense for your specific situation, a tax advisor can help you model both options before you file.

Frequently asked questions

Is PMI tax deductible in 2026?

Yes. The One Big Beautiful Bill Act, signed July 4, 2025, permanently reinstated the PMI tax deduction starting tax year 2026.

I'm paying about $150 a month in PMI — can I deduct that on my 2026 taxes?

If you itemize your deductions and your AGI is below $109,000, yes — you could deduct the full $1,800 annual premium as mortgage interest on Schedule A.

Does the PMI tax deduction apply to FHA mortgage insurance premiums too, or just conventional loans?

Both are covered. The reinstated deduction applies to PMI on conventional loans, FHA mortgage insurance premiums (MIP), VA funding fees, and USDA guarantee fees.

My income is around $105,000. Do I still qualify for the PMI deduction, or does it phase out?

You'd qualify for a partial deduction. The phase-out begins at $100,000 AGI and reduces the deduction by 10% for every $1,000 over that threshold. At $105,000 in AGI, you would qualify for 50% of the full PMI deduction. The deduction disappears entirely at $109,000.

What is the One Big Beautiful Bill Act and what did it change for homeowners?

The One Big Beautiful Bill Act is legislation signed into law on July 4, 2025. For many homeowners, its most significant change is the permanent reinstatement of the mortgage insurance premium tax deduction, which had been unavailable since the end of 2021.

The bottom line about deducting PMI

PMI has always been a temporary cost, a small, manageable premium that buys you the ability to own a home without a 20% down payment.

Now, for the first time since 2021, it also carries a permanent federal tax benefit for qualifying homeowners.

If you're currently paying PMI, review your 2026 itemized deductions and confirm whether claiming the deduction makes sense for your situation. If you're a buyer deciding how much to put down, factor the deduction into your math, but build your decision around your full financial picture, not the tax benefit alone.

...in as little as 3 minutes — no credit impact