The IRS publication states the following:
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Qualified mortgage insurance.
Qualified mortgage insurance is mortgage insurance provided by the
Department of Veterans Affairs, the Federal Housing Administration, or the
Rural Housing Service, and private mortgage insurance (as defined in
section 2 of the Homeowners Protection Act of 1998 as in effect on
December 20, 2006). Mortgage insurance provided by the Department of
Veterans Affairs is commonly known as a funding fee. If provided by the
Rural Housing Service, it is commonly known as a guarantee fee. The
funding fee and guarantee fee can either be included in the amount of the
loan or paid in full at the time of closing. These fees can be deducted fully in 2016 if the mortgage
insurance contract was issued in 2016.
There is nothing that specifically states you cannot amortize the fee versus deducting it in full in the year paid. It also doesn't state you must take the fee all in the year paid. This can be interpreted to allow you the decision to amortize.
