OBBBA Restores Key Tax Break: Mortgage Insurance Premiums Deductible Again in 2026

If you’ve been paying mortgage insurance premiums (MIP) on your home loan, there’s good news ahead. Under a recent update to the tax code—part of the OBBBA—these premiums will once again be deductible as qualified residence interest starting with the 2026 tax year. This change marks a valuable opportunity for homeowners to reduce their taxable income and enhance their overall tax benefits.

What Changed?

Under the new legislation, Section 163(h)(3)(F) of the tax code was amended to extend and modify the rules around the deduction for qualified residence interest — the interest you pay on your mortgage that you can deduct from your taxable income.

A key highlight is that mortgage insurance premiums, which had been excluded from interest deductions, are now explicitly treated as deductible interest again starting with tax years beginning after December 31, 2025.

This means if you pay for mortgage insurance (often required if your down payment is less than 20%), those premiums can be deducted just like your mortgage interest.

Why Is This Important?

Mortgage insurance premiums can add a significant amount to your monthly housing costs, especially for first-time homebuyers or those with lower down payments. Previously, these premiums were not deductible, making the total cost of homeownership higher.

With the new rule change:

• You can reduce your taxable income by the amount you pay in mortgage insurance premiums.

• This may result in lower overall taxes owed, effectively lowering the cost of homeownership.

• The deduction will apply retroactively to all taxable years starting after 2025, so plan accordingly for your 2026 tax return.

  
  

What You Need to Know

• This change applies to mortgage insurance premiums related to qualified residence interest.

• The deduction does not apply to all insurance types, so check your mortgage documents or consult a tax professional to confirm.

• The amendment also reorganized and clarified other related clauses, so it’s a good idea to keep an eye on official IRS guidance as the tax year approaches.

  
  

Final Thoughts

If you’ve been holding off on buying a home due to the cost of mortgage insurance or feeling the pinch from those extra monthly payments, this new tax break can provide some relief. Being able to deduct mortgage insurance premiums again is a welcome change that can ease your tax burden and make homeownership more affordable.

As always, tax laws can be complex, and individual circumstances vary, so it’s wise to consult with your accountant or tax advisor to understand how this change impacts your specific situation.

The information provided in this blog post is intended for general informational purposes only and should not be construed as legal or tax advice. While every effort has been made to ensure the accuracy of the information, tax laws and regulations are subject to change, and individual circumstances may vary. For personalized advice and to ensure compliance with current tax laws, it is strongly recommended that you consult with a qualified tax professional, financial advisor, or legal counsel. The author and publisher of this blog assume no responsibility for any errors or omissions, or for any actions taken based on the information contained herein.