The recent proposal to amend the Internal Revenue Code of 1986 seeks to enhance the mortgage insurance premium deduction by increasing the income eligibility cap and establishing its permanency. This legislation, currently under review by the House Committee on Ways and Means, has attracted attention from lawmakers and housing advocates alike.

Supporting Statements from Lawmakers

Representative Vern Buchanan, Vice Chairman of the Ways and Means Committee, emphasized the urgent need for tax relief amidst soaring housing prices. “With housing prices skyrocketing in Florida and across the country, it’s our responsibility to provide tax relief for middle-class families seeking to own a home,” he stated. Buchanan believes this bipartisan initiative will help many Americans realize the dream of homeownership.

Co-sponsor Jimmy Panetta (D-Calif) echoed these sentiments: “The costs of mortgage insurance can make buying a home that much more difficult for working families. Our bill would make the mortgage insurance premium tax deduction permanent and update the income threshold so more middle-class homeowners can benefit.” He noted that modernizing this tax provision could enable more Americans to achieve and maintain homeownership, particularly in the current challenging housing market.

Industry Response and Advocacy

The Mortgage Bankers Association (MBA) has actively supported initiatives aimed at reducing mortgage insurance premiums, especially for Federal Housing Administration (FHA) loans. Following the Trump administration’s call to address housing supply and affordability, the MBA has reiterated its commitment to reducing mortgage insurance costs.

Bob Broeksmit, President and CEO of the MBA, indicated optimism regarding future regulatory relief, stating, “We expect an easing of the regulatory burden. Even more immediately, though, we believe the administration could very quickly make good on this pledge by examining the mortgage insurance premium for FHA loans.”

Support from U.S. Mortgage Insurers

Seth Appleton, President of U.S. Mortgage Insurers (USMI), expressed strong endorsement for H.R. 2760, calling it “common-sense legislation that would restore, make permanent, and expand eligibility for the tax deduction for mortgage insurance (MI) premiums.”

He provided context regarding the significance of this deduction, noting, “From 2007 until its expiration in tax year 2021, the MI premium deduction was claimed 44.5 million times, representing a combined $64.7 billion in deductions for hardworking homeowners.” He added, “The expiration has deprived millions of low- and moderate-income taxpayers from benefitting from this deduction in recent years.”

Looking Ahead

The proposed Middle Class Mortgage Insurance Premium Act represents a proactive approach to restore financial relief to taxpayers and enhance the affordability of homeownership for American families. As discussions continue in Congress, the impact of this bill could be significant in creating a pathway for a greater number of families to achieve their homeownership goals.