PMI is not deductible for most homeowners, but there is one narrow exception that applies to some people

Private Mortgage Insurance (PMI) is the monthly fee you pay when you put down less than 20 percent on a home loan. For most homeowners, this cost cannot be deducted from your federal income taxes. However, if you took out your mortgage between 2007 and 2021, you may have been able to deduct PMI in those specific years under a temporary tax rule that has since expired. That rule is not currently in effect.

The key distinction is between PMI and mortgage interest, which remains fully deductible. Many homeowners confuse the two because they appear on the same mortgage statement. Mortgage interest is the cost of borrowing the money itself. PMI is insurance that protects the lender if you stop paying. The IRS treats them differently.

Key Takeaways

  • PMI cannot be deducted on your current tax return unless you took out your mortgage between 2007 and 2021 and meet specific income limits.
  • The temporary PMI deduction expired after the 2021 tax year and has not been reinstated.
  • Mortgage interest itself remains fully deductible, and you should not confuse it with PMI on your mortgage statement.
  • If you paid PMI in 2007 through 2021, you may have been able to deduct it in those years, but you cannot claim it retroactively now.

The expired PMI deduction and when it applied

From 2007 through 2021, homeowners could deduct PMI as a form of mortgage interest under Section 163(h)(3) of the tax code. This was a temporary provision that Congress extended several times. It expired on December 31, 2021, and Congress has not renewed it.

If you took out your mortgage during those years and paid PMI, you could have deducted it on your federal tax return for that year only — you cannot go back and claim it now. The deduction was subject to income limits: it began to phase out if your adjusted gross income exceeded $100,000 (or $50,000 if you filed as married filing separately), and it disappeared entirely at $109,000 ($54,500 if married filing separately).

This was never a permanent part of the tax code. It was always described as temporary relief, and it has now lapsed. There is no current legislation to bring it back.

Why PMI is not deductible now

PMI is insurance, not interest. The IRS classifies it as a personal expense, similar to homeowners insurance or property taxes. While mortgage interest qualifies for deduction because it is the cost of borrowing money, PMI is a fee you pay to protect the lender's investment in your home.

The temporary deduction that existed from 2007 to 2021 was an exception to this rule, created during the housing crisis to help struggling homeowners. Once that crisis passed and the provision expired, PMI returned to its standard treatment: non-deductible.

How to tell PMI apart from mortgage interest on your statement

Your monthly mortgage payment typically includes four components: principal, interest, property taxes, and insurance. PMI appears as a separate line item, often labeled "PMI," "mortgage insurance," or "private mortgage insurance." Mortgage interest is listed separately and is usually the largest component of your early payments.

Your lender sends you a Form 1098 each January showing how much mortgage interest you paid that year. PMI does not appear on this form because it is not deductible. If you are itemizing deductions on your tax return, you will deduct the mortgage interest shown on the 1098, but you will not include PMI anywhere.

How to remove PMI from your mortgage

Since PMI cannot be deducted, the best financial move is to eliminate it. You can do this by building equity in your home until you reach 20 percent down payment equivalent. Once you own 20 percent of the home's value, you can request that your lender remove PMI.

The timeline depends on your home's value and how quickly you pay down the principal. If your home appreciates, you may reach 20 percent equity faster. If your home loses value, it may take longer. Some lenders will remove PMI automatically once you reach the threshold; others require you to request it in writing.

You can also refinance your mortgage if rates are favorable and you have built enough equity. A new loan with 20 percent down will not require PMI at all.

What you can still deduct related to your mortgage

Even though PMI is not deductible, several mortgage-related costs remain deductible if you itemize on your tax return. Mortgage interest is fully deductible up to $750,000 of loan principal (or $375,000 if married filing separately). Property taxes are deductible up to $10,000 per year in total state and local taxes (SALT cap). Mortgage points — fees you pay upfront to lower your interest rate — are also deductible in the year you pay them, under certain conditions.

Homeowners insurance, HOA fees, and utilities are not deductible. The SALT cap, introduced in 2017, limits how much you can deduct in combined state income tax, sales tax, and property tax. This affects many homeowners in high-tax states.

Should you itemize or take the standard deduction

Whether mortgage interest and property taxes save you money depends on whether you itemize deductions or take the standard deduction. The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly. If your mortgage interest plus property taxes plus other deductible expenses do not exceed these amounts, itemizing will not help you.

Many homeowners, especially those with smaller mortgages or in lower-tax states, benefit more from the standard deduction. A tax professional can calculate which approach saves you more money in your specific situation.

Frequently Asked Questions

Can I deduct PMI if I paid it in 2021 or earlier?

Only if you paid it in the specific year you are claiming it. You cannot go back and claim PMI deductions from past years now. If you paid PMI in 2021, you could have deducted it on your 2021 tax return, but that year has passed. The deduction expired after 2021 and is not available for any year after that.

Is PMI the same as mortgage insurance?

PMI is one type of mortgage insurance. It protects the lender when you put down less than 20 percent. FHA loans use mortgage insurance premiums (MIP) instead, which work similarly but are required for the life of the loan. VA loans and USDA loans have their own insurance structures. None of these are deductible under current tax law.

What if I refinanced my mortgage — does that change the PMI deduction?

No. Refinancing does not restore the PMI deduction. The deduction expired in 2021 regardless of when you refinanced. If your new loan requires PMI, you cannot deduct it.

How much does PMI typically cost?

PMI usually costs between 0.5 and 1.5 percent of your loan amount per year, depending on your credit score, down payment size, and loan type. On a $300,000 loan, that could range from $1,500 to $4,500 per year. Your lender can give you an exact quote based on your situation.

Can I deduct PMI if I am self-employed?

No. PMI is not deductible for anyone under current tax law, whether you are self-employed or a W-2 employee. The temporary deduction that existed from 2007 to 2021 applied to all taxpayers equally, and it is no longer available.