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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

The mortgage insurance tax deduction is returning – making homeownership more affordable for American families

(BPT) - Many aspiring homebuyers know that saving for a 20% down payment can be a major hurdle to homeownership. As nearly 40 million homeowners can attest, however, private mortgage insurance (MI) allows for as little as 3% down to qualify for home financing sooner. U.S. Mortgage Insurers (USMI) reports that the private MI industry supported more than 800,000 low down payment borrowers in 2024 alone.

"Private MI is one of the most powerful financial tools available to homebuyers today since it can put homeownership within reach much sooner, giving buyers additional years of wealth-building," said Seth Appleton, president of USMI.

Consider this: USMI's report found that it could take a typical potential homebuyer 26 years to save for a 20% down payment plus closing costs on a home at the national median sales price. A typical homebuyer using private MI with 5% down can shave off many years that would otherwise be spent on the homebuying sidelines and can come to the closing table with tens of thousands of dollars less in closing costs. Private MI creates homeownership opportunities for these qualified borrowers, particularly first-time homebuyers who made up 65% of purchasers with private MI in 2024. Further, private MI paid monthly by the borrower - the most common form - is a temporary cost, which can be canceled once the loan meets certain requirements.

Additionally, publicly reported data confirm that the cost of private MI has declined 25% since 2017, in contrast to other costs of homeownership like homeowner's insurance and property taxes. And, thanks to the recent passage of the One Big Beautiful Bill Act, MI premiums will once again be deductible for qualifying homeowners on their federal income taxes beginning in tax year 2026.

From 2007 through 2021, the MI premium deduction was claimed 44 million times, by an average of 3.4 million homeowners each year, representing a combined $65 billion in deductions for hardworking Americans. In tax year 2021, qualified taxpayers received an average deduction of $2,364, according to IRS data. Those savings add up, which is why the MI tax deduction has enjoyed broad support from lawmakers on both sides of the aisle, industry groups, housing advocates and civil rights organizations who all see value in how the deduction benefits hardworking American families without increasing risk in the housing finance system.

Interested individuals can learn more about the benefits of private MI at www.LowDownPaymentFacts.com, a resource launched by USMI to offer homebuyers low down payment mortgage information and dispel the myth that a 20% down payment is required to become a homeowner.

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