Is private mortgage insurance (PMI) tax deductible?

When you get a mortgage, your lender may make you pay for private mortgage insurance (PMI). This insurance policy doesn’t protect you. Instead, it protects your lender from the chance that you default. Typically, PMI is only required if you get a loan with a lower down payment.

Rules about the tax treatment of PMI payments have been in flux in recent years. We’ll break down what PMI is and whether you can deduct the cost of PMI from your income when filing your taxes.¹

How does PMI work?

PMI is a type of insurance that is included with some conventional mortgages. It protects your lender from the chance that you default on your loan.

Generally, PMI is mandatory for any loan where the down payment is less than 20%. After you reach 20% equity in your home by paying down your loan balance or having your home appreciate in value, you can ask for PMI to be removed from the loan. Lenders automatically end PMI payments when you reach 22% equity based on your original loan amount.

PMI is an additional amount you must pay each month, so it’s important to budget for it when buying a home.

You should also note that other types of loans, such as FHA loans, have similar mortgage insurance payments. With FHA loans a mortgage insurance premium (MIP) is mandatory and can’t be removed without waiting for a set period or refinancing the loan.²

How much is PMI?

 How much you pay for PMI depends on the amount of your loan. Usually, the cost ranges from 0.2% to 2% of the loan amount.

According to Freddie Mac, PMI is usually about $30 to $70 for every $100,000 borrowed, but it can be higher in some cases.

How do you pay PMI?

PMI is added to your monthly mortgage bill, so you automatically pay for PMI when you make your loan payment. If you look at an itemized mortgage bill, you can see all of the factors that make up the total payment amount, including your PMI payment.

Can you deduct PMI on your taxes?

The tax rules surrounding PMI have changed many times in recent years, so it’s natural to wonder if you can deduct PMI on your taxes.

Between 2007 and 2021, homeowners were permitted to deduct the cost of PMI if they itemized their taxes, which allowed more than 3 million homeowners to take the deduction each year. This changed in 2022 when changes to the tax code meant that PMI was no longer deductible.

As of now, the tax code will change for 2026 and beyond, allowing for taxpayers to deduct PMI once again because it has been recategorized to receive the same treatment as mortgage interest. That means that you can only deduct PMI if you itemize your deductions, which is not true for all people.

How much can a PMI deduction save you?

How much the PMI deduction will save you depends on a few factors, including how much you pay in PMI and your tax rate.

First, the PMI deduction will only save you money if you itemize your taxes. For 2026, the standard deduction will be $16,100 for single people and $32,200 for those married filing jointly. That means you need to have more than that amount in itemized deductions for itemizing to save you money.

Assuming you itemize, the next step is to figure out how much you pay in PMI, which is the amount you can deduct when filing your taxes. In 2021, the average deduction was just over $2,300 but was much higher in some states, like California, Colorado, or Washington.

Finally, you need to multiply the amount you paid in PMI by your tax bracket to find out how much you can save. The higher your tax bracket, the bigger the savings. So, if you pay $2,300 in PMI each year and are in the 22% tax bracket, you’ll save $2,300 * 0.22 = $506  in taxes.

This table illustrates typical loan amounts and their associated PMI payment, as well as the savings based on your tax bracket.

Bottom line: PMI will be tax deductible again in 2026

PMI is generally a necessary cost if you get a conventional loan without making a 20% down payment. While it adds to the cost of your mortgage, it can make homeownership more achievable for many people.

You can’t deduct PMI from your income when filing your taxes in 2025, but you can take a deduction for PMI starting in 2026. Just make sure that itemizing will save you more money than taking the standard deduction.

If you’re ready to start your homebuying journey, you can apply for a loan with Rocket Mortgage today.

¹ This article is for informational purposes only and is not intended to provide financial, investment, or tax advice. You should consult a qualified financial or tax professional before making decisions regarding your retirement funds or mortgage.

² Refinancing may increase finance charges over the life of the loan.