Form 1098 Instructions 2026: A Practical Filing Guide for Mortgage Interest

Accurate mortgage interest reporting is essential for maintaining IRS compliance and helping borrowers receive correct tax information. And, even small reporting errors can result in penalties, processing delays, or unnecessary correspondence with the IRS.

Form 1098 instructions lay out when businesses must report mortgage interest, points, mortgage insurance premiums, and certain property details to the IRS and to borrowers. Continue reading to understand the rules and the filing process in detail.

When Is Form 1098 Generally Required?

Form 1098 needs to be filled in when you have received $600 or more as interest on mortgages from an individual during the calendar year in the course of your trade or business. It could include interest received from:

• Homeowners
• Individual borrowers
• Sole proprietors
• Borrowers with qualifying mortgage loans secured by real property

The $600 threshold is evaluated separately for each mortgage. This means that when the mortgage interest received on one mortgage is less than $600, you aren’t required to file for that mortgage, even if the same borrower pays $600 or more in total on different mortgages. You can still file voluntarily below the threshold, but the same reporting rules apply.

Who Must File Form 1098?

Organisations generally must file Form 1098 if they receive $600 or more in mortgage interest from one person on a single mortgage as part of their business. Usually this includes:

• Banks and credit unions
• Mortgage lenders
• Loan servicers and collection agents
• Private lenders operating in a trade or business
• Government bodies and related agencies that collect mortgage interest
• Cooperative housing corporations, for interest received from individual tenant-stockholders

Businesses don’t have to be professional lenders for the rule to apply. For example, if a real estate developer finances a buyer’s purchase in the developer’s own subdivision and the property secures the loan, the developer must file Form 1098 if the reporting threshold is met.

The party that first receives the mortgage interest payments generally has to file Form 1098. This is often the loan servicer.

Which Loans and Payments Belong on Form 1098

For purposes of Form 1098 instructions, a mortgage is a debt secured by real property. Real property includes land and buildings, and may include a qualifying manufactured home. Reportable interest includes interest on secured home equity loans, lines of credit, and credit card obligations secured by real property.

The typical reporting logic:

• Mortgage interest received – this is the main filing trigger. File Form 1098 if the mortgage interest and any reportable points total $600 or more for one mortgage.
• Points – certain points paid when buying a principal residence are reportable in Box 6. Points paid for refinancing, home improvement loans, home equity loans, or a second home generally are not reported in this box.
• Mortgage insurance premiums (Box 5) – reportable if the current-year rules treat them as deductible mortgage interest and the premiums are $600 or more.
• Refunds of overpaid interest – report refunds or credits of mortgage interest paid too much in an earlier year in Box 4 of the current-year Form 1098.

What Information Do You Need Before Filing?

There is less need for corrections when full records are collected upfront. Before you can fill out Form 1098, you must have:

• Recipient/lender name, address, phone number, and TIN
• Borrower name, address, and TIN
• Mortgage interest received during the year
• Outstanding mortgage principal
• Mortgage origination date
• Any refund of overpaid interest
• Mortgage insurance premiums, if applicable
• Points paid when buying the borrower’s main home, if applicable
• Property address or description
• Any state reporting information required for the mortgage, if applicable

Before filing, verify borrower names and TINs. Incorrect identifying information is one of the most common causes of IRS notices and corrected filings.

Box-Level Filing Logic

• Box 1 – Mortgage interest received from the borrower during the year
• Box 2 – Mortgage balance at the start of the year, or when the loan began or was acquired
• Box 3 – Date of mortgage origination
• Box 4 – Overpaid interest refund
• Box 5 – Mortgage insurance premiums, when applicable
• Box 6 – Points paid when buying the borrower’s main home
• Box 7 – Checkbox if the property address is the same as the borrower’s address
• Box 8 – Address or description of the property securing the mortgage
• Box 9 – Number of properties securing the mortgage
• Box 10 – Other information
• Box 11 – Date the lender acquired the mortgage, if applicable

Operational Checklist

• Check loan balances and interest in your records
• Review points separately
• Confirm borrower details before preparing the form
• Prepare a separate Form 1098 for each mortgage and check the $600 threshold for each one
• Keep documentation to support corrected forms or post-year adjustments

Form 1098 Deadlines

Form 1098 has separate deadlines for sending the borrower’s copy and filing with the IRS.

January 31 and February 28, 2027, both fall on a Sunday. Therefore, those due dates shift to the next business day.

A Note on Recent Legislative Changes

OBBBA, the “One Big Beautiful Bill Act”, signed into law in July 2025, increases the reporting threshold for Form 1099-NEC and Form 1099-MISC from $600 to $2,000 for payments made after December 31, 2025 in some categories. The Form 1099-K threshold was also restored to more than $20,000 and more than 200 transactions for third-party payment networks.

However, these changes do not affect Form 1098. For 2026 payments, file Form 1098 if your business receives $600 or more in mortgage interest, including certain points, from an individual or sole proprietor on one mortgage.

Also note that for tax year 2026 and the 2027 filing season, IRIS will replace FIRE as the IRS system for electronically filing information returns.

Common Filing Mistakes That Trigger Rework

Borrower-type errors: Filing Form 1098 for a corporation, partnership, or another borrower that is not an individual or sole proprietor.

• Loan-security errors, like reporting interest on a debt not secured by real property
• Per-mortgage threshold errors, which include adding interest across multiple loans instead of assessing each mortgage in isolation
• The servicer, lender, or collection agent not correctly determining who must file Form 1098
• Timing errors, such as missing a filing deadline or sending the borrower’s statement late, that can lead to penalties

Real-Life Scenarios

#Scenario 1: A mortgage lender receives $4,800 in interest on one residential loan from an individual borrower.
Result: File Form 1098, reporting the interest in Box 1.

#Scenario 2: One borrower has three loans and pays $300 interest on each.
Result: No Form 1098 is required for these loans. The interest cannot be combined because the $600 threshold applies separately to each mortgage.

#Scenario 3: A developer finances the sale of a home in its own subdivision and receives qualifying mortgage interest.
Result: The trade-or-business rule and the $600 threshold still can trigger a filing requirement, even if the developer isn’t a bank.

#Scenario 4: A loan is secured by real estate, but the legal borrower is a corporation.
Result: Generally, no Form 1098 filing, based on the borrower-type exception.

#Scenario 5: A servicing bank receives reportable mortgage payments on behalf of another lender.
Result: The servicer may be responsible for filing under the first-recipient rule.

Why File Form 1098 Online

If you have many borrowers and loans to process, manually preparing and filing Forms 1098 can be time-consuming. Electronic filing helps to organise records, reduce manual re-entry, and track corrections.

Platforms such as 1099Online.com give filers one workflow to prepare Form 1098, review borrower and loan information, eFile with the IRS, furnish borrower copies, and file corrections.

FAQs

1. What is Form 1098 used for?

It reports mortgage interest received on a loan secured by real property.

2. Who must file Form 1098?

Businesses generally must file Form 1098 if they receive $600 or more in mortgage interest, including certain points, from an individual or sole proprietor on one mortgage.

3. Does Form 1098 apply to corporations?

In general, it does not apply when the borrower is a corporation, partnership, trust, estate, or association. It generally applies when the borrower is an individual or sole proprietor.

4. When is Form 1098 due?

For 2026 forms, send the borrower’s copy by February 1, 2027. File paper forms with the IRS by March 1, 2027, or eFile by March 31, 2027.

5. Does a borrower with multiple loans get one form or several?

Prepare a separate Form 1098 for each mortgage that meets the filing requirements.