Is PMI Tax Deductible in 2026? What the Restored Deduction Covers

Yes. For tax year 2026, qualified mortgage insurance premiums are deductible again as home mortgage interest, claimed on line 8d of Schedule A (Form 1040), with a phase-out that begins at $100,000 of adjusted gross income. The deduction covers private mortgage insurance, FHA mortgage insurance, the VA funding fee, and the USDA guarantee fee. This guide explains what qualifies, where the limits fall, and why it does not change how you compare offers; it is general information, not tax advice.

Key takeaways

• The itemized deduction for qualified mortgage insurance premiums is back for tax year 2026, on line 8d of Schedule A (Form 1040), per the IRS draft Publication 936.
• The deduction was unavailable for tax years 2022 through 2025; Public Law 119-21, signed July 4, 2025, restored it for taxable years beginning after December 31, 2025.
• Qualified mortgage insurance means PMI, FHA mortgage insurance, the VA funding fee, and the USDA Rural Housing Service guarantee fee, on contracts issued after 2006.
• The deduction phases out above $100,000 of adjusted gross income ($50,000 married filing separately) and ends above $109,000 ($54,500 married filing separately).
• The deduction only helps taxpayers who itemize, and it applies identically to every lender's offer, so it is not a reason to prefer one lender.

Is PMI tax deductible in 2026?

Yes. The Internal Revenue Service's early release draft of Publication 936 for 2026 returns states that the itemized deduction for qualified mortgage insurance premiums "has been reinstated for tax year 2026" and is claimed on line 8d of Schedule A (Form 1040) for amounts paid or accrued in 2026.

The premiums are treated as home mortgage interest. The insurance must be connected with home acquisition debt, a mortgage used to buy, build, or substantially improve a main or second home and secured by it, and the contract must have been issued after 2006.

As of October 2026 the publication is an early release draft posted October 7, 2026, so the line number and thresholds are worth re-checking once the IRS releases the final version.

What changed, and why did the deduction disappear?

The deduction lapsed after 2021 and was unavailable for tax years 2022 through 2025. Public Law 119-21, signed on July 4, 2025, amended section 163(h) of the Internal Revenue Code, effective for taxable years beginning after December 31, 2025.

The statute's termination clause ended the deduction for premiums paid or accrued after December 31, 2021; the 2025 law added a clause that the termination does not apply. The IRS Internal Revenue Manual, in a section dated October 1, 2026, says the deduction "was permanently reinstated for tax years beginning after December 31, 2025."

Why do many older articles still say the deduction expired?

Because the IRS publication for 2025 returns is still correct for 2025. Publication 936 (2025) states, "You can no longer claim the deduction." That is right for a 2025 return filed in 2026 and wrong for a 2026 return filed in 2027.

Which mortgage insurance premiums qualify?

Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, plus private mortgage insurance as defined in section 2 of the Homeowners Protection Act of 1998, according to the IRS draft Publication 936.

Monthly premiums paid during 2026 count for 2026, and what PMI is and when it cancels covers how a conventional premium is set. FHA loans add an upfront premium of 1.75 percent of the base loan amount plus an annual premium paid monthly, under HUD Mortgagee Letter 2023-05; FHA vs conventional loans compares the programs. VA loans charge a one-time funding fee, covered in the VA funding fee explained, and USDA guaranteed loans carry a guarantee fee through the Rural Housing Service.

How are upfront premiums handled?

Prepaid premiums covering periods after the tax year are spread over the shorter of the loan term or 84 months, beginning with the month the insurance was obtained, per the draft Publication 936. The unamortized balance is lost if the mortgage is paid off early. VA and USDA Rural Housing Service insurance is exempt from the rule.

An FHA upfront premium of 1.75 percent on a $300,000 base loan is $5,250, or $62.50 a month over 84 months, so a loan closed in May yields $500 of deductible upfront premium for the first year and $750 for each full year after that, before the phase-out. That is the amount deducted, not the tax saved.

What is the income limit for the mortgage insurance deduction?

The deduction starts to phase out when adjusted gross income exceeds $100,000, or $50,000 for married filing separately, and is eliminated once AGI exceeds $109,000, or $54,500 for married filing separately, according to the IRS draft Publication 936 as of October 2026.

How does the phase-out work?

Section 163(h) of the Internal Revenue Code reduces the otherwise deductible premiums by 10 percent for each $1,000 ($500 if married filing separately), or fraction of that amount, of AGI above the threshold. A taxpayer with $104,500 of AGI is over by $4,500, which counts as five steps, so half the premiums remain deductible; at $109,001 the tenth step removes the deduction. The thresholds are fixed in the statute, not indexed for inflation.

Do you have to itemize, and where does it go?

Yes. The deduction is an itemized deduction reported on line 8d of Schedule A, so it only reduces tax when total itemized deductions exceed the standard deduction.

For tax year 2026 the standard deduction is $16,100 for single filers and married individuals filing separately, $24,150 for heads of household, and $32,200 for married couples filing jointly, under IRS Revenue Procedure 2025-32, published in November 2025.

What does Form 1098 show?

The mortgage holder reports mortgage insurance premiums of $600 or more in box 5 of Form 1098, per the IRS instructions for the form, and the draft Publication 936 says the statement is due to the borrower by January 31 of the following year.

Is mortgage interest still deductible in 2026, and what is the limit?

Yes. Interest on home acquisition debt of up to $750,000, or $375,000 for married filing separately, remains deductible for 2026. Congress struck the January 1, 2026 sunset on that limit in section 70108 of Public Law 119-21, published by the U.S. Government Publishing Office, so it no longer reverts to the older $1 million cap.

The $750,000 limit applies to debt incurred after December 15, 2017; earlier mortgages keep the $1 million limit, or $500,000 married filing separately, per the draft Publication 936. The interest actually paid, not the A.P.R., goes on Schedule A; A.P.R. vs interest rate explains the difference.

Does the PMI deduction change which mortgage offer to pick?

No. The deduction lowers the after-tax cost of mortgage insurance for taxpayers who itemize and fall under the phase-out, but it applies the same way to every lender's offer, so it does not change which offer has the lower rate, A.P.R., fees, or premium.

What differs between Lender A and Lender B is the rate, points, origination charges, and on a conventional loan the PMI rate each lender's insurer quotes for your credit band and loan-to-value. The deduction depends on itemizing and on your AGI, neither of which a lender controls.

Putting more down to avoid PMI, or choosing FHA over conventional, likewise turns on how long the insurance lasts and what it costs before tax, which loan-to-value explained lays out; the minimums behind each option are in minimum down payment by loan type. Borrowers commonly ask each lender for the PMI rate, any upfront premium, and the cancellation terms.

How does HomeTurf show mortgage insurance in an offer?

Each offer on HomeTurf shows the rate, A.P.R., fees, and points exactly, and the lender you choose documents any mortgage insurance on its Loan Estimate. HomeTurf does not give tax advice.

HomeTurf is a technology marketplace, not a lender or loan originator. You post a purchase, refinance, pre-approval, or Beat My Rate auction once, and N.M.L.S.-verified, state-licensed lenders bid inside a window of 12, 24, 36, or 48 hours, capped at 48 hours because mortgage rates change daily. You stay anonymous while they bid. In a Pre-Approval auction, lenders see your financial details as ranges. In a Beat My Rate auction, they see the rate and A.P.R. you want beaten exactly and your other financial details as ranges. In a Purchase or Refinance auction, they see the exact price, value, and loan figures, because accurate offers depend on them, and your credit score, income, and assets as ranges. HomeTurf does not pull your credit; the credit range is self-reported. HomeTurf does not lock or guarantee any rate.

Lenders cannot pay for placement, and HomeTurf never selects, ranks as best, or recommends a lender. Only the lender you choose receives your contact details, and it must reach out within 36 hours. Whichever lender you choose, its mortgage insurance gets the same tax treatment.

Frequently asked questions

Is FHA mortgage insurance (MIP) tax deductible in 2026?

Yes. The IRS draft Publication 936 lists mortgage insurance provided by the Federal Housing Administration as qualified mortgage insurance, so both the upfront premium of 1.75 percent of the base loan amount and the annual premium can be treated as home mortgage interest on Schedule A line 8d for 2026. The upfront premium is spread over up to 84 months, subject to the income phase-out.

Is the VA funding fee tax deductible in 2026?

Yes, for tax year 2026. The IRS draft Publication 936 lists mortgage insurance provided by the Department of Veterans Affairs, commonly known as the funding fee, as qualified mortgage insurance. The fee is not spread over 84 months; it is deductible in full for 2026 if the contract was issued in 2026, whether paid at closing or included in the loan, subject to the income phase-out.

Can I deduct PMI paid in 2025?

No. The IRS Internal Revenue Manual states that the deduction was unavailable for tax years 2022 through 2025, and Publication 936 for 2025 returns says it can no longer be claimed. The restored deduction applies to amounts paid or accrued in 2026 and later, so the first return that can carry it is the 2026 return filed in 2027.

Do I need to itemize to deduct PMI?

Yes. The mortgage insurance deduction is an itemized deduction on line 8d of Schedule A (Form 1040), so it only reduces tax when total itemized deductions exceed the standard deduction, which for tax year 2026 is $16,100 for single filers, $24,150 for heads of household, and $32,200 for married couples filing jointly under IRS Revenue Procedure 2025-32.

Can I deduct mortgage insurance on a rental property?

Not through this deduction, which covers qualified mortgage insurance on home acquisition debt secured by your main or second home, per the IRS draft Publication 936. A rental property follows different rules: IRS Publication 527 states that the expenses of renting your property, such as maintenance, insurance, taxes, and interest, are deducted from rental income on Schedule E (Form 1040).

Where are mortgage insurance premiums reported on Form 1098?

In box 5. The IRS instructions for Form 1098 direct the mortgage holder to report mortgage insurance premiums of $600 or more in box 5, while box 1 carries the interest. The statement is due to the borrower by January 31 of the following year, per the draft Publication 936, which also says to contact the mortgage insurance issuer if the deductible amount is not shown.

Compare the offer first, keep the Form 1098 for later

The restored deduction is a tax-time detail, not a shopping tool. It applies the same way to any lender's mortgage insurance, so the comparison that matters still happens before you choose: rate, A.P.R., fees, points, and the premium itself. On HomeTurf, verified lenders bid while you stay anonymous and you decide, so when you are ready to see competing offers you can Start Your Auction. HomeTurf is a technology marketplace, not a lender, and it is free for borrowers.

Remember that this is general information, not financial advice, and every situation is different.

Sources

• Internal Revenue Service, Publication 936 (2026) early release draft, Home Mortgage Interest Deduction: irs.gov
• Internal Revenue Service, Internal Revenue Manual 21.6.4, Deductible and Nondeductible Interest Paid (21.6.4.4.1.5): irs.gov
• Internal Revenue Service, Publication 936 (2025), Home Mortgage Interest Deduction: irs.gov
• Internal Revenue Service, Instructions for Form 1098, Mortgage Interest Statement: irs.gov
• Internal Revenue Service, Revenue Procedure 2025-32, Internal Revenue Bulletin 2025-45: irs.gov
• Internal Revenue Service, Publication 527, Residential Rental Property: irs.gov
• U.S. Government Publishing Office, Public Law 119-21, section 70108, amending 26 U.S.C. 163(h): govinfo.gov
• U.S. Department of Housing and Urban Development, Mortgagee Letter 2023-05, FHA annual mortgage insurance premium rates: hud.gov

HomeTurf is a technology marketplace, not a lender or loan originator. This content is for general information only and is not financial or legal advice.