What is a Qualified Mortgage Insurance Premium?

A qualified mortgage insurance premium is a payment to insure a homeowner’s mortgage payments.

How Does a Qualified Mortgage Insurance Premium Work?

Let’s say John and Jane Doe buy a house. They obtain a mortgage to buy the home, but because they don’t have a 20% down payment, the lender requires them to obtain mortgage insurance. The mortgage insurance essentially ensures that the lender will be repaid if John and Jane Doe default on the loan. Every month, John and Jane Doe will make the monthly principal and interest payments on the loan, and they will also make their monthly mortgage insurance premium payment.

Mortgage insurance typically comes from the Federal Housing Administration, the Department of Veterans Affairs, the Rural Housing Service or a private mortgage insurer.

Why Does a Qualified Mortgage Insurance Premium Matter?

A qualified mortgage insurance premium may be tax-deductible if the mortgage originated after 2006, though there are income limits. The amount of insurance premiums a borrower has paid appears on IRS Form 1098, which the lender sends to the borrower once a year. It is important to note, however, that the tax-deductibility of mortgage insurance premiums is often in flux due to congressional action and IRS regulations, so check with a qualified tax professional regarding your situation.