Good news for homeowners and buyers: Mortgage insurance (MI) premiums will now be permanently tax-deductible again. This change not only helps reduce the overall cost of homeownership but may also make purchasing a home more attainable, especially for first-time buyers.
The update takes effect for the 2026 tax year, which means homeowners can plan ahead and take advantage of this benefit when filing in 2027.
Why Mortgage Insurance Matters
Mortgage insurance plays a critical role in helping buyers qualify for a home with a smaller down payment—often as little as 3–5% instead of the traditional 20%. While MI protects the lender, it also opens the door to homeownership for many who might otherwise need years to save for a larger upfront investment.
Now that MI premiums are tax-deductible again, qualified homeowners may be able to reduce their taxable income and save money year after year.
How the Deduction Works
The deduction amount is based on household income:
- Up to $100,000: You may deduct 100% of your MI premiums annually.
- $100,001 to $110,000: You may qualify for a partial deduction.
- Past average savings: When previously in effect, homeowners saved more than $1,400 annually on average.
What This Means for You
Whether you’re in the process of buying a home or already paying MI on an existing loan, this update could positively impact your financial outlook:
- Buyers may find it easier to budget for a mortgage with monthly savings potential.
- Homeowners may see real savings during tax season, reducing the long-term cost of MI.
Explore Your Options
Everyone’s situation is unique, and this change could mean different things depending on your income, loan type, and goals. Curious what it could mean for you?
Reach out today to start the conversation.
