Which is Better: PMI or Combo Loans?

The good news is mortgage insurance premiums are now tax deductible, thanks to a provision contained in the Tax Relief and Health Care Act of 2006, effective January 1st of this year. The bad news is there are restrictions. For example, the tax benefit is applicable only to new loans with mortgage insurance, it runs out at the end of 2007 and is subject to certain qualifying income levels.

So, does this mean it's better to get a loan with mortgage insurance or are combo loans (sometimes called piggyback loans) still a better deal? Whether you should go for mortgage insurance or opt for a combo depends on your individual qualifying status and the rates offered, among other variables.

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