Mortgage insurance is not tax deductible for most homeowners, but there is a narrow exception that expired and may return

Private mortgage insurance (PMI) — the monthly payment you make when you put down less than 20 percent — is not a tax deduction under current law. The same applies to FHA mortgage insurance premiums (MIP), VA funding fees, and USDA may provide fees. These are costs of borrowing, not deductible interest or property tax.

There was a temporary exception called the Mortgage Insurance Premium (MIP) deduction that allowed some taxpayers to write off mortgage insurance paid on loans taken out before 2007. That provision expired at the end of 2017 and has not been renewed. Congress could revive it, but it is not currently available.

The reason this matters: mortgage insurance can add $100 to $300 per month to your payment, depending on your loan size and down payment. Understanding what you cannot deduct helps you plan your actual tax liability and avoid looking for a deduction that does not exist.

Key Takeaways

  • PMI and FHA mortgage insurance premiums are not tax deductible under current law, even though they are part of your monthly mortgage payment.
  • A temporary deduction for mortgage insurance expired in 2017 and has not been restored, though Congress could revive it in future years.
  • Mortgage insurance is a cost of borrowing, not interest or property tax, which is why the IRS does not treat it as deductible.
  • You can reduce or eliminate mortgage insurance by refinancing once you reach 20 percent equity, which may save more money than any tax deduction would.

Why mortgage insurance is not deductible

The IRS treats mortgage insurance as a financing cost, similar to loan origination fees or points paid to lower your interest rate. Those are also not deductible. The deductions available to homeowners — mortgage interest and property tax — are tied to the cost of owning the property itself, not the cost of borrowing money to buy it.

Mortgage interest is deductible because it is considered a cost of using borrowed money. Property tax is deductible because it is a direct tax on the property. Mortgage insurance, by contrast, is a fee you pay to protect the lender if you default. It benefits the lender's position, not your ownership of the home, so the tax code does not treat it as deductible.

The expired MIP deduction and whether it might return

From 2007 to 2017, homeowners could deduct mortgage insurance premiums paid on loans originated before January 1, 2007. This was a temporary provision that Congress extended several times before letting it expire. The deduction was never large — it phased out at higher incomes and was capped at the amount of mortgage interest you could deduct — but it did provide some relief for borrowers with PMI.

Congress has not revived this deduction since 2017, and there is no current bill to restore it. However, temporary tax provisions are sometimes extended retroactively or made permanent, so it is worth checking the tax code each year or asking a tax professional if you are in a situation where it would help. Do not assume it will return, but do not assume it never will either.

How to actually reduce your mortgage insurance costs

Rather than waiting for a tax deduction, the most direct way to reduce mortgage insurance is to build equity and remove it. Once you reach 20 percent equity in your home, you can request that your lender cancel PMI. This happens automatically on FHA loans once you reach 78 percent loan-to-value, though you can pay it off faster by making extra principal payments.

Refinancing is another option if interest rates drop or your home value rises. A cash-out refinance lets you use your home equity to pay down the loan balance below 80 percent of the current value, which eliminates the need for PMI on the new loan. The savings from removing PMI often outweigh the cost of refinancing, especially if you plan to stay in the home for several more years.

Some lenders also offer lender-paid mortgage insurance (LPMI), where the lender covers the insurance cost in exchange for a slightly higher interest rate. This is not deductible either, but it can be easier to remove — you simply refinance when rates or your equity position improves — and it does not show as a separate line item on your payment.

What you can deduct instead

While mortgage insurance itself is not deductible, the interest portion of your mortgage payment is. You receive a Form 1098 from your lender each January showing the total interest you paid in the previous year. This amount is deductible if you itemize deductions on your tax return.

Property tax is also deductible, up to $10,000 per year under current law (this limit is set to expire after 2025 unless Congress extends it). Homeowners who itemize can deduct both mortgage interest and property tax, but most homeowners now take the standard deduction instead, which means they do not benefit from either deduction.

How to handle mortgage insurance on your tax return

You do not report mortgage insurance anywhere on your tax return because it is not deductible. Your lender will not include it on your Form 1098, and you should not try to deduct it yourself. If you see mortgage insurance listed on a tax software form or a tax preparer's worksheet, ask them to remove it — it is a common mistake.

The only exception is if you are self-employed and have a home office. In that case, a portion of your mortgage insurance might be deductible as a business expense, but this is rare and requires careful calculation. A tax professional can help you determine whether this applies to your situation.

Frequently Asked Questions

Can I deduct mortgage insurance if I paid it in 2024?

No. The temporary deduction expired in 2017 and is not currently available. You cannot deduct mortgage insurance premiums paid in 2024 or any year after 2017 unless Congress passes new legislation to restore it.

What if my lender says mortgage insurance is tax deductible?

Your lender may be mistaken or referring to an older rule. Contact a tax professional or check the IRS website to confirm. Mortgage insurance has not been deductible since 2017, and no current law allows it. Do not rely on your lender's tax advice.

Is FHA mortgage insurance different from PMI for tax purposes?

No. FHA mortgage insurance premiums (MIP) are not deductible, just like PMI. The same applies to VA funding fees and USDA may provide fees. None of these are tax deductible under current law.

If I remove PMI by refinancing, can I deduct the refinancing costs?

Refinancing costs are not deductible in the year you pay them. However, if you paid points to lower your interest rate, those points can be deducted over the life of the loan. A tax professional can help you calculate this if it applies to your refinance.

Should I wait for the MIP deduction to come back before paying off my mortgage insurance?

No. The deduction expired in 2017 with no sign of returning, and mortgage insurance costs you money every month. Building equity and removing PMI through refinancing or extra principal payments will save you far more than any tax deduction would.