Trump Signs 'One Big Beautiful Bill' into Law on July 4th

In a marked political win for President Donald J. Trump and his Administration, H.R. 1, the One Big Beautiful Bill Act, defied very long odds and endured intense opposition to find passage and a place on the President’s desk — and with his signature now added, it is law. 

But put aside all the D.C. drama. The One Big Beautiful Bill Act is sweeping budget and tax legislation, and within it are provisions that directly or indirectly impact the housing and mortgage industries. 

While the law doesn’t include any headline-grabbing first-time homebuyer credits or down-payment grants, there are meaningful tax changes and housing credit adjustments that loan originators and broker-owners should understand — and can use to better serve their clients.

Key Mortgage And Housing Provisions 

• 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%. 
   
• 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: There’s no expansion, but also no shrinkage. In high-cost markets, borrowers can plan around this known limit when purchasing or refinancing. 
   
• 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. It also presents opportunities for originators working in multifamily or with community lenders. 
   
• 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.
  
  Why it matters: Federal down-payment assistance is not coming from this bill. Continue to rely on state housing finance agencies (HFAs), local grants, and employer-assisted programs to help clients overcome down payment hurdles. 
   
• 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 like New York, New Jersey, and California may get larger deductions — making homeownership more attractive for upper-middle-income borrowers.

Real Estate Investor Tax Wins

The new law includes multiple provisions that directly benefit real estate investors and landlords — important for brokers and loan officers working with investor clients. 

• Permanent 20% Deduction For Qualified Business Income (QBI). Section 199A’s QBI deduction is made permanent. Most rental real estate qualifies as a trade or business under IRS guidance.
  
  Why it matters: Real estate investors can continue deducting 20% of net rental income — lowering effective tax rates and improving investment yields. 
   
• 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.
   
• Section 1031 Like-Kind Exchanges Preserved. No changes were made to the like-kind exchange rule under Section 1031 for real estate.
  
  Why it matters: Investors can still defer capital gains when selling and reinvesting in new properties — critical for scaling portfolios and cash flow preservation.
   
• Gain-on-Sale Rollover Provision Maintained. The bill maintains the ability to roll over gains on property sales into Qualified Opportunity Zones and other structures.
  
  Why it matters: This gives investors continued flexibility in deferring taxes and redeploying capital strategically. 
   
• $5 Trillion Federal Debt Ceiling Increase. While not a direct real estate provision, this provision of the law avoids default and offers market stability.
  
  Why it matters: It helps maintain confidence in capital markets and ensures continued U.S. Treasury-backed liquidity — vital for investor financing, especially in CRE and DSCR lending. 

Action Items for Mortgage Professionals

1. Inform Borrowers About Permanent Mortgage Insurance Deductibility. Especially for FHA, VA, and 3% down conventional loans, this is a way to offset monthly costs.
    
2. In High-Cost Markets, Mention The Certainty Of Mortgage Interest Deduction Limits. The $750K cap won’t expire or change, helping clients plan for tax impacts.
    
3. Educate Clients And Referral Partners On The Expanded LIHTC Program. More affordable housing supply could loosen inventory pressures over time.
    
4. Reinforce Local DPA Options. With no new federal help, it's more important than ever to be the expert on available state / local assistance.
    
5. Talk To Investor Clients About Tax Advantages. Use QBI, 1031 exchanges, and interest deductibility to help clients plan acquisitions or refinances. The law gives them stable footing to expand portfolios — even in higher-rate environments.

Bottom Line

While the One Big Beautiful Bill Act doesn’t revolutionize housing policy, it locks in favorable tax treatment for homeowners, real estate investors, and developers — and offers stability and certainty in key areas like mortgage insurance deductibility, QBI, and Section 1031.

For mortgage professionals, these aren’t just policy notes, they’re strategic tools to build stronger borrower relationships, offer smarter advice, and position themselves as a trusted resource in an uncertain market.