Now mortgage insurance is making more sense than ever! Brand new legislation now allows homeowners with up to $100,000 combined income (married couple) to deduct mortgage insurance premiums from taxable income. The law is effective for the 2007 tax year. MI tax deductibility is one more reason to offer traditional loan options, such as fixed-rate loans protected by MI, instead of the expensive and unpredictable piggyback. Not only is MI tax deductible, it can also be cancelled AND there’s no unexpected payment increase as with piggyback ARMs.