The One Big Beautiful Bill Act is a comprehensive piece of budget and tax legislation that includes several provisions with both direct and indirect implications for the housing and mortgage industries.
Although it doesn't feature attention-grabbing initiatives like first-time homebuyer credits or down payment grants, it does introduce significant tax reforms and housing credit updates that loan originators and broker-owners should be aware of — and can leverage to better support their clients.
Key Mortgage And Housing Provisions
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Permanent Mortgage Insurance Deduction. Borrowers can now permanently deduct mortgage insurance premiums (PMI, FHA MIP, VA funding fees, and USDA guarantee fees), subject to income limits.
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Permanent $750K Cap On Mortgage Interest Deduction. The bill makes permanent the mortgage interest deduction cap at $750,000 of acquisition debt.
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Expansion Of The Low-Income Housing Tax Credit (LIHTC). The law permanently increases 9% LIHTC allocations by 12.5% and reduces the bond financing requirement for 4% LIHTCs from 50% to 25%.
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No New Federal Down Payment Or Homebuyer Assistance. The law contains no first-time homebuyer tax credit or first-generation down payment grant. Several housing program rescissions are included, such as the U.S. Department of Housing and Urban Development's (HUD) Green and Resilient Retrofit Program.
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SALT Deduction Cap Temporarily Raised. The legislation raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 per household from 2025-2029, with a phase-down starting for incomes over $500,000.
