Mortgage Solutions

Celebrate the Return of the MI Premium Tax Deduction

Written by Jim Jumpe

On a personal level, I’m glad Congress restored the mortgage insurance (MI) tax deduction for 2018–2020 because it sends such a clear signal about the value of investing in a home for families, individuals and our communities.

The MI tax deduction expired after 2017, and I’m hopeful its brief absence will help our industry recognize how important an incentive it is.

Suddenly, home ownership isn’t only a pathway to investing in the most valuable asset many of us will ever own, but it’s part of a national policy encouraging young families and individuals to become community stakeholders.

It’s also smart policy because home ownership helps people build wealth over the long term more effectively than virtually anything else — which has been made clear by research comparing the assets of homeowners vs. renters. A 2018 Urban Institute publication cited a study showing the average homeowner has household wealth of $231,420, while the average renter has household wealth of $5,200.

The MI Tax Deduction in Context

To provide a little background: Congress has restored the MI premium tax deduction for eligible borrowers who itemize for premiums paid in 2018, 2019 and 2020.1 Borrowers with adjusted gross incomes (AGI) below $100,000 per year may deduct 100% of their MI premiums on their federal tax returns. Those with incomes above $100,000 up to $109,000 can deduct a portion of their MI payments — with a cutoff of any deduction at $109,000-plus.

That’s an enormous pool of eligible borrowers because more than two-thirds of households earn less than $100,000, according to research by DQYDJ. In 2019, the U.S. median household income was $63,030.

The MI tax deduction is a powerful incentive for homebuyers looking for the most cost-effective way to finance their home purchase. With mortgage insurance, they can look forward to savings on their tax bill. They’ll also save on their monthly premium when you insure their loans with Arch MI RateStar® and ensure they receive our most competitive rates. Eligible borrowers can save even more when you customize their premium payments with RateStar BuydownSM, the industry’s only MI buydown tool.

In a housing market where affordability continues to be a major concern, the MI tax deduction delivers major benefits:

  • Lowers the cost of home ownership for new buyers and refi customers.
  • Makes it easier for buyers to plan a home purchase with clear tax deductibility rules.
  • Benefits current homeowners who may be able to deduct MI premiums paid during 2018 and 2019.2

Don’t forget that MI, unlike a second lien and many FHA loans, is also cancelable. For many homebuyers, it’s simply the best choice.

This is a great message to share with borrowers, whether you’re planning a homebuying seminar, an ad campaign or are simply speaking to a prospective homebuyer who doesn’t know how easy it is to buy a home or the many advantages tax-deductible MI offers.

For more details about tax-deductible MI (and how even current homebuyers can take advantage of it), read our comprehensive FAQ.

Arch MI’s Insights blog is a forum for exchanging ideas. If you have developed plans to maximize the impact of the MI premium tax deduction for your borrowers, send us an email to tell us about it.


1 Deduction based on MI premium allowable to that tax year for a qualified mortgage, including prepaid (single) MI. Adjusted Gross Income limit for full deduction is $50K for persons who are married filing separately, with 10% adjustments every $500 and no deduction if over $54,500. See IRS Publication 936. Arch MI cannot give tax advice. Borrowers should consult with their own tax adviser concerning the applicability of this deduction in their particular circumstances under the Internal Revenue Code and the laws of any other taxing jurisdiction.

2 The legislation makes MI premium payments made from Jan. 1, 2018, to Dec. 31, 2020, eligible for the tax deduction when all requirements are met.

About the author

Jim Jumpe

Senior Vice President and Chief Marketing Officer
As Chief Marketing Officer, Jim Jumpe oversees a long-term strategy to steward the Arch MI brand, help drive sales through effective customer communication, events, advertising and marketing collateral, and develop and execute innovative marketing strategies.