Premiums on private and government mortgage insurance will become tax deductible next year for some borrowers for the first time, based on legislation passed by the departing Congress.

Private mortgage insurance is almost always required of borrowers who don’t have down payments of at least 20 percent. These policies protect the lender against default on the mortgage, while the borrower pays the premium. The policy is usually required until such time as the homeowner has realized an equity position of 20% of the home’s worth.

Government insurance is mostly offered through the Federal Housing Administration to borrowers considered too risky for traditional loans programs, usually first time home buyers. Borrowers who make less than $100,000 a year will be able to write off the full amount of their premiums. Homeowners making more than $110,000 won’t be eligible.

According to the trade organization Mortgage Insurance Companies of America, about twenty percent of the mortgages taken out in the last five years have required insurance.

The insurance can cost several hundred dollars a year and is a major addition to the monthly mortgage premium for many borrowers. The fact that it is now deductible may reduce the number of people who take out second loans in order to meet the 20 percent down mark – an additional burden that hampers many new homeowners in today’s inflated market.