Homeowners

Still Paying PMI? You May Be Able to Deduct Your Mortgage Insurance from Your Taxes Next Year

Every month, millions of homeowners pay for mortgage insurance. The good news is they may soon be able to get some of that money back.

The federal government reinstated the private mortgage insurance (PMI) tax deduction for 2026. That means the majority of homeowners who pay mortgage insurance for Conventional and government-backed loans may be able to write off those premiums when they file their tax returns in 2027.

More than 800,000 homeowners who purchased properties in 2024 were paying mortgage insurance, according to U.S. Mortgage Insurers.

If you have mortgage insurance, the tax savings could be meaningful. For example, if you pay $3,000 in PMI this year, the deduction could save you around $660 at tax time if you itemize and qualify for the write-off.

Here’s what you need to know about the PMI tax deduction and how it may reduce your tax bill.

What are PMI and MIP on a home?

Private mortgage insurance (PMI) is typically required by lenders when you buy a home with a Conventional loan and don’t make a down payment of at least 20%. It’s designed to protect the lender’s investment (the money they lent you) if you stop making your mortgage payments.

The cost of PMI can range from $30 to $70 for every $100,000 you borrow, according to Freddie Mac. On a $400,000 loan, it would cost between $120 and $280 a month.

“PMI exists to protect the lender,” said Gene Bott, vice president and senior tax advisor at Tax Hive in Salt Lake City, Utah. “A homeowner gets from it is the ability to buy a home with less than a 20% down payment.”

Typically, your lender rolls this PMI into your monthly mortgage payment for convenience.

If you have a government-backed mortgage, such as a Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) or U.S. Department of Agriculture (USDA), the PMI equivalent is called mortgage insurance premium (MIP).

It’s required on all FHA loans regardless of your down payment amount.

With MIP on an FHA loan, you pay 1.75% of the loan amount upfront at closing and between 0.15% and 0.75% of the loan amount each year.

Using the $400,000 mortgage example, your upfront MIP payment for an FHA loan would be $7,000 at closing, plus between $50 and $250 a month added to your mortgage payment each year.

Fortunately, both PMI and MIP are deductible under the new 2026 tax rules.

How much could the PMI deduction reduce your taxes?

The biggest benefit of the mortgage insurance deduction is that it puts money back in your pocket.

“For those paying $150 a month, this can give the taxpayer an additional $1,800 in deductions,” said Bott.

When the PMI deduction was last available in 2021, the average taxpayer deduction for it was $2,346, according to U.S. Mortgage Insurers.

Bott also noted that the deduction is especially helpful for homeowners in higher-cost markets. Larger loan amounts leave homeowners with larger PMI payments and, subsequently, a bigger potential write-off.

How to claim the PMI deduction on your taxes

The PMI deduction only pays off if you itemize your deductions instead of taking the standard deduction on your taxes. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, according to the IRS.

If your total deductions are greater than those amounts, you may be able to claim your PMI deduction in 2027. Here’s how to do it:

1. Check your income. Single filers may claim the full deduction if their adjusted gross income is below $50,000. Married couples filing jointly qualify up to $100,000. The deduction reduces gradually if you earn more than that. But the deduction disappears completely for single filers who have an adjusted gross income above $54,500 and for married couples filing jointly who have an adjusted gross income above $109,000.
   
   
2. Confirm your home loan qualifies. You may only claim the deduction if your mortgage balance is $750,000 or less.
   
   
3. Get your Form 1098. Your lender should send you this form in January. It shows your mortgage interest paid for the year.
   
   
4. File Schedule A with your income taxes. Schedule A is the IRS form where you list itemized deductions. Beginning next year, you can report eligible mortgage insurance premiums there alongside your mortgage interest.

If you’re unsure about your eligibility for the deduction, consult a tax consultant or tax preparation software to confirm.

How to get rid of PMI and other mortgage insurance

Fortunately, you may be able to get rid of PMI on Conventional loans once you have 20% equity in your home. You may reach that point by reducing your loan balance or if your home value rises, or a mix of both.

Unfortunately, it’s much harder to cancel MIP on government loans. If you took out an FHA loan after June 3, 2013, MIP may be removed after 11 years only if you made a down payment of at least 10% when you purchased the property.

If you can’t cancel MIP, refinancing into a Conventional loan may be an option. If you already have 20% equity in the property, you won’t owe PMI on the new loan either.

The bottom line on mortgage insurance tax deductions

Every dollar you pay in mortgage insurance this year may reduce your taxable income when you file your income taxes next spring.