The mortgage industry just got a boost that could make homeownership more affordable, and your conversations with borrowers even more impactful…
We’re excited to share a major update that benefits you and your customers: mortgage insurance (MI) premiums are once again tax deductible. But this time, the change is permanent from a recently passed budget reconciliation package.
After all, we know that you’re committed to helping people become homeowners, and that’s where MI can help. It’s our driving force at Enact to help enable more prospective homebuyers to buy homes, and keep them in their homes sustainably. So, let’s dive into the 2025 MI tax deductibility update.
What’s new on MI tax deductibility?
MI premiums became tax deductible in 2007 as part of a “temporary” tax deduction that was extended multiple times by Congress before expiring after the 2021 tax year.
Unlike the previous MI tax deduction, which required annual renewal by Congress, the new provision makes MI premiums a permanent part of the tax code. This means borrowers won’t have to wait each year to find out if they can deduct their MI payments—it’s here to stay.
When does the tax deduction take effect?
Qualified borrowers can begin claiming the deduction on their 2026 tax returns, filed in spring 2027. This gives lenders and borrowers time to prepare and understand how to take full advantage of the benefit.
Who qualifies for this tax deduction?
Borrowers with an adjusted gross income (AGI) of up to $110,000 are eligible. However, they must itemize their deductions to claim the benefit.
As always, we recommend borrowers consult a tax professional to determine what’s best for their situation.
What are the benefits of this tax deduction?
This change translates directly into savings for borrowers. From 2007 to 2021, USMI found that when MI premiums were previously deductible:
- Homeowners claimed $64.7 billion in MI deductions.
- The deduction was used 44.5 million times.
- On average, 3.4 million homeowners claimed it each year.
- Qualified taxpayers received an average deduction of $1,454.
To provide some perspective, in 2021 alone, 1.3 million households deducted an average of $2,364 in MI premiums.
These numbers show just how impactful this deduction can be, especially for first-time homebuyers who are often balancing tight budgets and rising costs.
What this means for you and your customers
For those of you in the mortgage and housing spaces, this update offers a valuable opportunity to guide borrowers and help them fully realize this benefit. Because the benefit reduces the long-term cost of MI, it also makes monthly payments more manageable. Be sure to let your customers know that it’s a meaningful financial benefit that can make homeownership more accessible and sustainable, even if the savings aren’t immediately felt.
Considerations for next steps you can take:
- Educate your team: Make sure your team understands the deduction and how to walk prospective borrowers through this benefit, as well as all the benefits MI has to offer.
- Update your materials: Refresh borrower-facing content to reflect the new tax benefit.
- Incorporate into affordability scenarios: Use the tax deduction update to help borrowers see the long-term value of MI-backed loans.
- Partner with tax professionals: Consider co-hosting webinars or Q&A sessions to build trust and provide value to your community.
Ultimately, this change gives lenders a new way to frame MI as a benefit, not a burden. It’s a timely opportunity to re-engage with prospects, support affordability, and help more families achieve homeownership.
At Enact, we believe in supporting responsible homeownership. This permanent tax deduction is a win for the industry and more importantly, a win for the people we serve.
Get more from your MI partnership
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.
Never miss a post by subscribing to Enact MI's Discover360℠ Blog. We'll send you our most up-to-date topics right into your inbox.
