How does the OBBB affect homeowners?

1. 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.

Why it matters: This reduces the effective cost of low-down-payment loans. Mortgage professionals can position this as a long-term savings opportunity for FHA, VA, and conventional borrowers who put down less than 20%.

1. Permanent $750K Cap On Mortgage Interest Deduction. The bill makes permanent the mortgage interest deduction cap at $750,000 of acquisition debt.

Why it matters: Permanence provides clarity. There’s no expansion, but also no shrinkage. In high-cost markets, borrowers can now plan around this known limit when purchasing or refinancing.  

1. 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%.

Why it matters: More LIHTC supply means more affordable rental housing, which supports housing stability and may ease entry-level homebuyer competition.  

1. 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.

Why it matters: Homeowners in high-tax states can now claim larger deductions — making homeownership more attractive for upper-middle-income borrowers.

How does the OBBB affect investors?

• Permanent 20% Deduction For Qualified Business Income (QBI). Section 199A’s QBI deduction is made permanent, which can be applied to rentals that qualify as trades or businesses under IRC § 162

Why it matters: Real estate investors can continue deducting 20% of net rental income — lowering effective tax rates and improving investment yields.

• 100% Bonus Depreciation For Qualified Property. The bill permanently restores 100% bonus depreciation for most qualified property acquired and placed in service after January 19, 2025, reversing the previous phase-out schedule where bonus depreciation was set to decline to 40% in 2025 and 20% in 2026.

Why it matters: By utilizing cost segregation studies, investors can identify qualifying components within their properties and accelerate depreciation deductions, leading to increased cash flow and reduced taxable income. This can be particularly advantageous for investors undertaking renovation-heavy projects.

• Business Interest Deduction For Real Property Stays Intact. The bill preserves the current-law deductibility of interest expense on real property trades or businesses.

Why it matters: This protects investors using leverage (especially commercial or DSCR loans) from losing write-offs on mortgage interest — important in an era of high rates.

Mortgage Rates Rise in the First Half of July

The 30YR Fixed Rate Mortgage average has risen in July approximately 20 bps on concerns that inflation may rise. The producer price index— a measure of wholesale costs— showed no change in June, against the forecast for a 0.2% increase. Combined with Tuesday’s consumer price index release, the data suggests that President Trump’s tariffs are indicating only a marginal bite on the U.S. economy; however, some suggest that this may change in future as suppliers’  pre-tariff inventory diminishes.

Nearly one-third of major U.S. housing markets now see falling home prices

Annual home price growth in June was just 1.3%, down from 1.6% growth in May and the slowest rate in two years, according to ICE, a mortgage technology firm. Nearly one-third of the largest 100 markets are now showing annual price declines of at least a full percentage point from recent highs, and the trend suggests more markets will do the same. Single-family home prices were up 1.6%, while condominium prices were down 1.4% nationally. This is consistent with the trend shown above in the Corelogic home value index.

🔮 Looking Ahead

While some policymakers have expressed support for a July interest rate cut, recent economic data presents a mixed bag of encouraging signs coupled with some modest yellow flags. This is making investor less confident in investing in long-term investments driving up the 10 YR Treasury and, in turn, the 30 YR mortgage.

Fed Policy Outlook

The Federal Reserve has continued to hold off on any rate cuts so far in 2025. That being said, the Fed has continued to signal two cuts in 2025. While a July 29-30 FOMC rate cut is still a possibility,  market expectations have shifted towards a September cut.