Tax season puts finances front and center. Borrowers are reviewing deductions, reassessing past decisions, and thinking ahead about how to better position themselves financially. That makes now the ideal time to introduce an important update they may not be thinking about yet: starting in tax year 2026, mortgage insurance (MI) premiums will be deductible again, permanently.
This change creates a timely opportunity for lenders to reframe private mortgage insurance (PMI) not just as a path to homeownership, but as a longer‑term planning tool that supports affordability today and potential tax savings tomorrow.
Affordability remains the biggest barrier
Many borrowers are mortgage‑ready, but affordability continues to delay their path to homeownership. Limited housing supply, higher interest rates, and rising ownership costs have made it harder for buyers, particularly those without access to a large down payment, to move forward.
Mortgage insurance helps address this challenge by reducing the need for a 20% down payment. Still, PMI is often viewed as an added expense rather than a tool that enables earlier access to homeownership.
In reality, PMI already plays a critical role. In 2024 alone, 800,000 low‑down‑payment borrowers purchased homes with the help of MI, according to USMI’s 2025 MI in Your State Report. With PMI now permanently tax deductible, lenders have an additional, timely reason to bring MI into affordability and planning conversations.
PMI as a tax deduction is back and here to stay
A key update many borrowers may not realize: PMI premiums are tax deductible again, starting with tax year 2026. Since this update in 2025, we’ve been covering its impact and the opportunity it brings for you and your borrowers. Unlike past extensions, this deduction is now permanent, eliminating year‑to‑year uncertainty.
PMI premiums were previously deductible from 2007 through 2021. During that time, the deduction was used 44.5 million times, totaling nearly $65 billion in claimed deductions. On average, 3.4 million homeowners claimed the deduction each year, with an average annual benefit of $1,454 per taxpayer. In its final year, the average deduction rose to $2,346, according to USMI.
When the deduction expired after 2021, borrowers lost meaningful tax relief just as other homeownership costs increased. Its return reintroduces a planning advantage borrowers can factor into their purchase decisions.
Without proactive education, however, many borrowers may remain unaware that PMI can now support both up‑front access to homeownership and potential future tax benefits.
Why tax season is the right moment to start the conversation
Although the PMI deduction applies beginning tax year 2026 (filed in 2027), tax season is when borrowers are already focused on deductions, cash flow, and financial tradeoffs, making it a natural time to introduce this update.
What borrowers should understand:
- PMI premiums paid to private MI companies and government agencies may be deductible on federal income taxes
- The deduction is now permanent, not subject to expiration
- Historically, the benefit supported low‑ and moderate‑income households, many of them first‑time homebuyers
- Reinforce that PMI costs are not permanent, while the access it provides can be life‑changing
- PMI is a planning tool, not just a monthly expense
- Encourage borrowers to consult a qualified tax professional to understand eligibility and itemization
Private MI already reduces the cash needed at closing and helps borrowers get into homes faster. The permanent tax deduction further strengthens its role in improving affordability, without increasing risk to the housing finance system.
Stay informed to better serve borrowers
Keeping up with policy updates like the permanent PMI tax deduction helps you guide borrowers with confidence—and helps more families move toward homeownership sooner.
Stay connected with Discover360℠ to keep up with industry trends, policy updates, and insights to help you support more borrowers in an ever-evolving housing market.
Your MI partnership doesn’t stop here
We offer underwriting services and training resources to help you effectively navigate your borrowers’ unique situations during their homebuying journey. You can also stay proactive and knowledgeable with recent industry updates to help make home happen for more people.
Be sure to make the most of your MI experience, too. If you need some extra insight, you can always contact your Enact Sales Rep for more info. They’ll be happy to help you meet your business needs, answer questions, and point you in the right direction.
Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Borrowers should consult a qualified tax professional regarding their individual circumstances.
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