A mortgage insurance premium is the amount a borrower pays for insurance that protects the lender, not the borrower, if the borrower falls behind on the loan (CFPB). The term covers two products. On a loan insured by the Federal Housing Administration it is the mortgage insurance premium, or MIP, charged as an up-front cost at closing plus a recurring cost inside the monthly payment. On a conventional loan it is private mortgage insurance, or PMI, which the Homeowners Protection Act of 1998 defines as mortgage insurance other than mortgage insurance made available under the National Housing Act, title 38, or title V of the Housing Act of 1949 (12 U.S.C. 4901(13)).
Where the Premium Lands in a Firm’s Work
The figure reaches a preparer on Form 1098. Box 5 is Mortgage Insurance Premiums, and the filer enters the total premiums of $600 or more paid for the tax year being reported, including prepaid premiums, for qualified mortgage insurance (IRS, Instructions for Form 1098).
That box is conditional in a way the rest of the form is not. The instructions direct a filer to report premiums received in the course of a trade or business from an individual only if section 163(h)(3)(E) applies (IRS, Instructions for Form 1098).
The statement still carries the number in a year the number does nothing. Publication 936 says the statement will show any mortgage insurance premiums paid, and the same publication opens by saying the itemized deduction for those premiums has expired and can no longer be claimed (IRS, Publication 936 (2025)).
Schedule A shows the same lapse in its numbering. In the Interest You Paid block, line 8d reads Reserved for future use (IRS, Schedule A (Form 1040) (2025)). Nothing here reaches a return that takes the standard deduction, which is the test worked through in SALT deduction and standard deduction.
Which Tax Years the Deduction Reaches
The rule is narrower than the term. Premiums paid or accrued for qualified mortgage insurance in connection with acquisition indebtedness with respect to a qualified residence are treated as qualified residence interest, so a premium tied to anything other than acquisition indebtedness sits outside the clause (26 U.S.C. 163(h)(3)(E)(i)).
Income then cuts it back. The amount otherwise treated as interest is reduced, but not below zero, by 10 percent of that amount for each $1,000, or $500 for a married individual filing a separate return, or fraction of that step, by which the taxpayer’s adjusted gross income for the taxable year exceeds $100,000, or $50,000 for that filer (26 U.S.C. 163(h)(3)(E)(ii)).
Read that income figure literally. The clause names plain adjusted gross income, so none of the add-back lists in modified adjusted gross income applies to it, and the input is the figure built at the line described in adjusted gross income.
Say a client itemizes, the premium is tied to acquisition indebtedness, and adjusted gross income sits above the threshold. The reduction runs like this.
Box 5 premiums 1,800
Adjusted gross income 105,000
Threshold 100,000
Excess 5,000
Whole steps of 1,000 in the excess 5
Reduction, 5 steps at 10 percent 50%
Treated as qualified residence interest 900Two dated clauses decide whether any of it runs at all. The treatment does not apply to mortgage insurance contracts issued before January 1, 2007, and a termination clause says it does not apply to amounts paid or accrued after December 31, 2021 (26 U.S.C. 163(h)(3)(E)(iii) and (iv)).
The termination clause is still printed, and a later subparagraph switches it off. Subparagraph (F), now headed Special rules for taxable years beginning after 2017, provides that clause (iv) of subparagraph (E) shall not apply (26 U.S.C. 163(h)(3)(F)(i)(III)). That subclause came from section 70108 of Public Law 119-21, whose amendments apply to taxable years beginning after December 31, 2025 (26 U.S.C. 163, Effective Date of 2025 Amendment).
So a return covering any year from 2022 through 2025 carries no deduction, and reading the termination clause on its own gives the wrong answer for a later year. What else that act moved inside a firm’s compliance work is in the One Big Beautiful Bill.
What It Is Confused With
MIP Is Not PMI
MIP belongs to FHA-insured loans and PMI to conventional loans, and they are priced and cancelled under different rules. The tax provision does not turn on which one a client bought, because qualified mortgage insurance covers insurance provided by the Department of Veterans Affairs, the Federal Housing Administration or the Rural Housing Service together with private mortgage insurance as defined by the Homeowners Protection Act (26 U.S.C. 163(h)(4)(E)).
The Premium Is Not the Deduction
Paying a premium and deducting it are separate questions with separate answers. The premium is owed under the loan whatever the tax year does, while the deduction exists only where the statute is in force for that year, the borrower itemizes, and adjusted gross income sits below the phaseout.
Common Questions
Because the lender is the insured party, not you. Mortgage insurance of any kind protects the lender if the borrower falls behind on payments (CFPB). On an FHA-insured loan it is not optional either, since the regulation directs the Commissioner to establish and collect both an up-front premium payment and annual premium payments (24 CFR 203.284).
There is no single figure to quote. The FHA regulation caps what the Commissioner may collect rather than fixing a price, and the period the annual premium runs varies with the mortgage term and with original principal as a share of appraised value (24 CFR 203.284). Private mortgage insurance rates vary by down payment amount and credit score, and most of it is paid monthly with little or no initial payment at closing (CFPB).
Firms that want box 5 and the Schedule A work handled the same way on every return can put a real block of it through our trial task before anything client facing depends on it.
