A Maine real estate agent is proposing a bill that would give homeowners a state tax deduction on mortgage insurance premiums as well as offer grants to help lower loan payments. 

Introduced by Democratic Rep. Wayne Farrin, who is also a licensed real estate agent, the bill would lead the state to implement an income tax deduction for private mortgage insurance payments made on first liens, similar to a federal policy already in place. 

Farrin's legislation would additionally require the Maine State Housing Authority to create a program that would issue eight grants totaling up to $15,000 to assist low- and moderate-income homeowners decrease their mortgage rate. 

"With our housing inventory at historic lows and prices at historic highs, we need innovative solutions that meet this moment," Farrin said in a press release.

"Homeownership is the key to building generational wealth and putting down roots in a community, but it's become a dream that's out of reach for working people. This bill will help make progress to bring that dream back within reach," he also noted. 

The Maine Association of Realtors and Habitat for Humanity both recently spoke out in support of the bill. The state legislature's housing and economic development committee will hold a work session to address the bill in coming weeks.  

Economic factors and the rising cost of housing earlier this decade means a median-priced property in Maine is now unaffordable to a majority of Maine residents, requiring more than 30% of their income. 

In 2020, 39% of Maine households fell under the affordability threshold. Four years later, that share expanded to 64%, with higher numbers across certain coastal counties that see many properties used as vacation homes or rentals. 

As an agent earlier in his career, Farrin stated he used to help between eight and 10 buyers make their first-home purchase, but such transactions were occurring less frequently in recent years. 

"While this legislation won't solve our housing challenges overnight, it provides a meaningful step that we can take that will help more folks be able to afford to buy a home," he said.

MIP tax deduction follows federal developments

If passed in its current form, the bill would allow homeowners to deduct the full cost of their private mortgage insurance premium from their state income taxes, whose rates currently range between 5.8% and 7.15%, beginning with their 2026 tax bill. 

The Maine proposal mirrors similar federal policy that took effect after President Trump signed the One Big Beautiful Bill Act last summer. The bill reintroduces MIP deductions on federal income taxes, which had first been allowed between 2007 and 2021 before lapsing, for the current calendar year. 

When previously offered to U.S. taxpayers, $64.7 billion worth of MIP deductions were claimed more than 44 million times, according to U.S. Mortgage Insurers.

A push to reinstate the federal deduction enjoyed wide bipartisan support earlier in 2025 prior to passage of the OBBBA. A proposal, dubbed the Middle Class Mortgage Insurance Premium Act, aimed to bring back the former MIP policy and originally planned to double the old upper-income eligibility limit from $100,000 to $200,000. 

The current policy keeps the limit at the former $100,000 level.