Is A 680 Credit Score Enough For A Home Equity Loan: Borrower’s Guide (2025)

What are common fees to expect?

Common fees associated with home equity loans include application fees, appraisal fees, title search fees, and closing costs. Application fees typically range from $300 to $500, while appraisal fees can vary from $300 to $700, depending on the property’s location and size. Closing costs may encompass various administrative expenses, which can total 2% to 5% of the loan amount, making it essential to budget for these additional costs.

How do fees vary by lender?

Fees can vary significantly between lenders based on their pricing structures and the terms of the loan. Some lenders may offer lower fees or even waive certain costs as part of a promotional campaign, while others may charge higher fees for additional services. It’s wise to compare the fee structures of multiple lenders to find the most cost-effective option for your home equity loan. Creating a detailed comparison table of fees can help clarify your choices.

Are fees negotiable?

Many fees associated with home equity loans are negotiable. Borrowers can often discuss application fees, closing costs, or even interest rates with lenders to secure better terms. Preparing for these negotiations by researching typical fees and having a clear understanding of your financial situation can position you favorably. Don’t hesitate to ask lenders if they can lower fees or offer alternative cost-saving options.

What risks should you consider with a home equity loan?

Taking out a home equity loan carries several risks that borrowers should be aware of before proceeding. Understanding these risks can help you make informed decisions and avoid potential financial pitfalls.

What happens if you default on the loan?

Defaulting on a home equity loan can lead to severe consequences, including foreclosure on your home. Since home equity loans are secured by your property, lenders have the right to take possession of your home if you fail to make payments. This risk underscores the importance of ensuring that you can comfortably manage your monthly payments before borrowing against your home equity.

How does it affect your home equity?

Taking out a home equity loan reduces the amount of equity you have in your home. If your home’s value decreases after taking the loan, you may find yourself in a situation where you owe more than your home is worth, commonly referred to as being “underwater.” This scenario can complicate future refinancing options and limit your financial flexibility.

What are the risks of variable interest rates?

If you choose a home equity loan with a variable interest rate, you face the risk of fluctuating payments. As market interest rates rise, your monthly payments could increase significantly, leading to a strain on your finances. Borrowers should assess their comfort level with potential rate increases and consider fixed-rate options if they prefer predictability in their payments.

How does your debt-to-income ratio influence eligibility?

Your debt-to-income (DTI) ratio is a critical factor that lenders use to evaluate your ability to repay a home equity loan. A lower DTI indicates that a smaller portion of your income goes toward debt payments, making you a more attractive borrower.

What is a debt-to-income ratio?

The debt-to-income ratio is a financial measure that compares your total monthly debt payments to your gross monthly income. It is expressed as a percentage and helps lenders determine how much of your income is committed to servicing debt. A lower DTI ratio suggests that you have more disposable income available for additional loans, including home equity loans.

How is it calculated?

To calculate your DTI ratio, divide your total monthly debt payments by your gross monthly income. For example, if your total monthly debt payments are $2,000 and your gross monthly income is $6,000, your DTI ratio would be 33% ($2,000 ÷ $6,000). Most lenders prefer a DTI ratio below 43%, but the lower it is, the more favorably they will view your application.

What ratio do lenders prefer?

While lenders may vary in their preferences, many prefer a debt-to-income ratio of 36% or lower for maximum eligibility and favorable terms. If your DTI is higher than 43%, you may face challenges securing a home equity loan or could be offered less favorable terms. Therefore, if your DTI ratio is on the higher side, consider strategies to reduce your debt before applying for a loan.

What documentation is needed to apply for a home equity loan?

Applying for a home equity loan requires specific documentation to verify your financial situation and the value of your home. Gathering these documents ahead of time can expedite the application process.

What financial documents are required?

Common financial documents required for a home equity loan application include recent pay stubs, tax returns from the last two years, bank statements, and proof of other income sources. Lenders may also request a credit report, which they will typically obtain on their own. Having these documents organized can streamline your application and help lenders assess your financial stability.

How does your employment status affect your application?

Your employment status is a key factor in your home equity loan application. Lenders prefer borrowers with stable, full-time employment, as it indicates a reliable income source. If you are self-employed, you may need to provide additional documentation, such as profit and loss statements, to demonstrate your income stability. Understanding how your employment status impacts your application can help you prepare accordingly.

Are there specific documents for self-employed borrowers?

Self-employed borrowers typically need to provide additional documentation to verify their income. This may include two years of tax returns, profit and loss statements, and bank statements that reflect business income. Lenders may scrutinize self-employed income more closely, so having thorough and well-documented financial records is crucial for a smooth application process.

How can you improve your credit score before applying?

Improving your credit score before applying for a home equity loan can enhance your chances of obtaining better loan terms. A stronger credit profile can lead to lower interest rates and more favorable repayment options.

What steps can you take to boost your score?

To improve your credit score, start by reviewing your credit report for errors and disputing any inaccuracies. Additionally, pay down existing debts, especially those close to your credit limits, as this can reduce your credit utilization ratio. Regularly making on-time payments and avoiding new debt can also contribute positively to your score, enhancing your eligibility for a home equity loan.

How long does it take to improve your credit score?

The time it takes to improve your credit score can vary based on your current financial situation and the steps you take. Generally, you may start to see improvements within a few months by consistently making on-time payments and reducing your credit utilization. However, significant changes may take longer, especially if you are working to resolve negative marks on your credit report.

Are there quick fixes that actually work?

While there are no guaranteed quick fixes for improving your credit score, certain actions can lead to faster results. Paying off high credit card balances, becoming an authorized user on a responsible friend’s account, or addressing errors on your credit report can yield quicker improvements. However, it’s essential to focus on sustainable credit behaviors for long-term benefits.

What is the difference between a home equity loan and a home equity line of credit (HELOC)?

A home equity loan provides a lump sum payment with fixed repayment terms, while a home equity line of credit (HELOC) offers a revolving credit line that you can draw from as needed. Understanding these differences can help you determine which option aligns better with your financial goals.

How do repayment terms differ?

Home equity loans typically have fixed repayment terms, meaning you’ll make consistent monthly payments over a predetermined period, often ranging from 5 to 30 years. In contrast, HELOCs usually have a draw period where you can borrow and repay as needed, followed by a repayment period. This flexibility can be advantageous if you prefer to borrow in stages, but it also requires careful management to avoid excessive debt.

What are the advantages of each option?

Home equity loans offer the advantage of predictable monthly payments and fixed interest rates, making budgeting easier. HELOCs provide flexibility and the ability to borrow only what you need, which can be beneficial for ongoing expenses. Choosing the right option depends on your specific financial needs and how you plan to utilize the funds.

Which is better for your financial situation?

The ideal choice between a home equity loan and a HELOC depends on your financial situation and objectives. If you have a substantial, one-time expense—such as home renovations—a home equity loan may be more suitable. However, if you anticipate smaller, ongoing expenses, a HELOC might offer more flexibility and control over borrowing costs.

Are there alternative financing options if your score is low?

If you have a low credit score, there are alternative financing options available that may help you access funds without relying solely on a home equity loan. Exploring these alternatives can provide you with the financial support you need.

What are personal loans?

Personal loans are unsecured loans that do not require collateral, making them a viable option for borrowers with lower credit scores. These loans typically have higher interest rates than secured loans, such as home equity loans, but they can provide quick access to funds. Personal loans can be used for various purposes, including debt consolidation or home improvements.

Can you consider a cosigner?

Having a cosigner with a stronger credit profile can improve your chances of qualifying for a home equity loan or other financing options. A cosigner agrees to take on responsibility for the loan if you default, reducing the lender’s risk. This can be a practical solution for borrowers with lower credit scores but requires trust and a clear understanding between both parties about financial responsibilities.

What about FHA loans?

FHA loans are government-backed mortgages designed for borrowers with lower credit scores or limited down payment options. While these loans are primarily for purchasing homes, they can be a helpful alternative for those looking to improve their financial standing before applying for home equity financing. FHA loans typically have more flexible credit score requirements, making them a viable option for some borrowers.

How does a 680 credit score affect loan repayment terms?

A 680 credit score can influence the repayment terms of your home equity loan, potentially leading to higher interest rates and less favorable conditions than those offered to borrowers with higher scores. Understanding how your score affects these terms is essential for making informed decisions.

What repayment terms are typically offered?

Borrowers with a 680 credit score may be offered various repayment terms, typically ranging from 5 to 30 years, depending on the lender’s policies. While you may still have access to fixed-rate options, lenders may impose stricter conditions or higher rates compared to those offered to borrowers with higher credit scores. Being aware of these terms can help you assess whether the loan aligns with your financial goals.

How do longer terms affect interest payments?

Longer repayment terms often result in lower monthly payments but can lead to higher overall interest costs over the life of the loan. For example, a $50,000 loan with a 6% interest rate over 30 years results in around $58,000 paid back, while a 15-year term at the same rate might cost approximately $42,000. When considering your loan terms, balance the desire for lower monthly payments with the total cost of borrowing.

Can you pay off your loan early without penalties?

Many lenders allow borrowers to pay off their home equity loans early, but some may impose prepayment penalties. These penalties can vary significantly among lenders, so it’s essential to review the loan agreement carefully. If you anticipate making extra payments or paying off the loan early, seek lenders with flexible repayment terms that do not penalize early repayment to save on interest costs.

Can you refinance a home equity loan with a 680 credit score?

Yes, refinancing a home equity loan with a 680 credit score is possible, although it may not yield the best rates or terms available to those with higher scores. Assessing your financial situation and current market conditions can help you determine if refinancing is advantageous.

What are the benefits of refinancing?

Refinancing a home equity loan can provide several benefits, including lower interest rates, reduced monthly payments, or a change from a variable to a fixed interest rate. This can lead to overall savings and improved cash flow. Additionally, refinancing may allow you to consolidate debt or access additional funds, making it a strategic financial move depending on your circumstances.

How does refinancing affect your monthly payments?

Refinancing can lower your monthly payments, particularly if you secure a lower interest rate or extend the loan term. For instance, refinancing a $50,000 loan from a 6% to a 4% interest rate could reduce your monthly payment from approximately $400 to $350, improving your cash flow. However, it’s essential to consider the costs associated with refinancing to ensure the benefits outweigh the expenses.

What costs are associated with refinancing?

Refinancing a home equity loan typically incurs several costs, including application fees, appraisal fees, and closing costs, which can range from 2% to 5% of the loan amount. While these costs can be substantial, they may be offset by the savings achieved through lower interest rates. It’s critical to calculate the break-even point to determine whether refinancing is financially beneficial in your specific situation.

What should you know about borrower protection laws?

Borrower protection laws exist to safeguard consumers when applying for and managing home equity loans. Understanding these laws can help you know your rights and responsibilities as a borrower.

What laws protect borrowers in home equity loans?

Several laws protect borrowers, including the Truth in Lending Act (TILA), which mandates clear disclosure of loan terms and costs, allowing borrowers to make informed decisions. The Home Ownership and Equity Protection Act (HOEPA) offers additional protections for high-cost loans, ensuring borrowers are aware of their rights and potential risks. Familiarizing yourself with these laws can empower you during the borrowing process.

How can you ensure your rights are protected?

To ensure your rights are protected, always read your loan agreement thoroughly, and ask questions about any unclear terms. Keep copies of all documents and communication with your lender. If you feel your rights have been violated, consider reaching out to a consumer protection agency or seeking legal advice to understand your options.

What should you do if you feel misled?

If you believe you have been misled by a lender regarding the terms of your home equity loan, document all communications and seek legal advice. You can also file a complaint with the Consumer Financial Protection Bureau (CFPB) or your state’s attorney general. Taking these steps can help protect your rights and potentially lead to resolution.

How to compare lenders for the best home equity loan?

Comparing lenders is essential for finding the best home equity loan terms. By evaluating multiple options, you can make an informed decision that meets your financial needs.

What factors should you consider when comparing lenders?

When comparing lenders, consider interest rates, fees, repayment terms, and customer service. Look for lenders with transparent fee structures and favorable interest rates for your credit score range. Additionally, read customer reviews and inquire about the application process to gauge how each lender values customer experience.

How can online reviews help you choose a lender?

Online reviews can provide valuable insights into the experiences of other borrowers. They can highlight lender responsiveness, transparency, and overall satisfaction. However, be cautious and look for reviews across multiple platforms to obtain a balanced perspective, as individual experiences can vary widely.

Are there reputable ranking sites for lenders?

Yes, several reputable ranking sites provide comparisons of lenders based on interest rates, terms, and customer reviews. Websites like Bankrate, NerdWallet, and LendingTree can help you evaluate multiple lenders side by side. Use these resources to gather information and weigh your options before making a final decision.

What role does your employment history play in loan approval?

Your employment history significantly impacts loan approval, as lenders prefer borrowers with stable and consistent income sources. A solid work history can enhance your credibility as a borrower.

How do lenders evaluate employment stability?

Lenders evaluate employment stability by reviewing your job history, length of employment, and consistency of income. A stable job with a long tenure can positively influence your application, while frequent job changes or gaps in employment may raise red flags. Providing a detailed employment history can help demonstrate your reliability as a borrower.

What if you are self-employed?

If you are self-employed, lenders may require additional documentation to assess your income stability, such as tax returns, profit and loss statements, and bank statements. They may analyze your business’s financial health, so maintaining accurate and organized records is essential. Being prepared with thorough documentation can help you present a strong case to lenders.

Can part-time work affect your application?

Part-time work can affect your loan application, particularly if it does not provide a stable income stream. Lenders typically prefer borrowers with full-time employment or consistent part-time income. If you rely on part-time work, be prepared to demonstrate additional sources of income or financial stability that can reassure lenders about your ability to repay the loan.

How do market conditions affect your home equity loan options?

Market conditions, including interest rates and housing market trends, can significantly influence your home equity loan options. Staying informed about these conditions can help you make better borrowing decisions.

What is the current state of the housing market?

The current state of the housing market can impact home equity loan availability and terms. In a strong housing market with rising home values, lenders may be more willing to extend credit, while a declining market may lead to stricter lending standards. Understanding these dynamics can help you assess your timing for applying for a home equity loan.

How does inflation impact interest rates?

Inflation can lead to rising interest rates, as lenders typically increase rates to maintain profitability during periods of economic uncertainty. As interest rates rise, the cost of borrowing also increases, which can directly affect your monthly payments and overall loan costs. Monitoring inflation trends can help you decide the best time to apply for a home equity loan.

What trends should you watch out for?

When considering a home equity loan, keep an eye on trends such as interest rate fluctuations, housing market performance, and economic indicators. Staying informed about these factors can provide valuable context for your borrowing decisions. Additionally, being aware of potential changes in regulations or lender policies can help you adapt your strategy accordingly.

Can a home equity loan affect your credit score?

Yes, taking out a home equity loan can affect your credit score, both positively and negatively. Understanding how this loan impacts your credit can help you manage your financial health effectively.

How does taking out a loan impact your score?

When you take out a home equity loan, it can initially lower your credit score due to the increase in your overall debt. However, if you consistently make on-time payments, your score may improve over time as you establish a positive repayment history. Managing your loan responsibly is key to minimizing any negative impact on your credit score.

What happens if you miss payments?

Missing payments on your home equity loan can have a significant negative impact on your credit score. Late payments can lead to penalties, increased interest rates, and damage to your credit profile. Additionally, repeated missed payments can result in defaulting on the loan, potentially leading to foreclosure and further credit score deterioration.

How can responsible borrowing help your score?

Responsible borrowing, such as making timely payments and keeping your debt levels manageable, can positively influence your credit score over time. By demonstrating financial responsibility, you build a strong credit history, which can open doors to better loan options in the future. Establishing a positive repayment pattern is essential for maintaining a healthy credit profile.

What are the tax implications of a home equity loan?

Home equity loans can have specific tax implications that borrowers should understand. These implications can affect your overall financial planning and potential deductions.

Are interest payments tax-deductible?

Interest payments on home equity loans may be tax-deductible, but only if the funds are used for qualified expenses, such as home improvements. The Tax Cuts and Jobs Act of 2017 limited the deductibility of interest for some borrowers, so it’s crucial to consult a tax professional to understand your specific situation and any limitations.

What should you know about tax benefits?

Beyond interest deductions, borrowers should be aware of potential tax benefits related to home equity loans. For example, the ability to deduct interest may also depend on the total amount of mortgage debt you have. Understanding these benefits can help you make informed financial decisions when considering a home equity loan.

How do changes in tax law affect home equity loans?

Changes in tax law can significantly impact the deductibility of interest on home equity loans. Staying informed about legislative updates and consulting with a tax advisor can help you navigate these changes and maximize your tax benefits. Being proactive in understanding tax implications can help you make sound financial choices regarding home equity borrowing.

What should you do if your loan application is denied?

If your home equity loan application is denied, it’s essential to understand the reasons behind the denial and take steps to improve your chances of approval in the future.

What are common reasons for denial?

Common reasons for loan denial include a low credit score, high debt-to-income ratio, insufficient equity in the home, or incomplete application documentation. Understanding the specific reasons for denial can guide your next steps and help you address any issues before reapplying.

How can you appeal a denial?

If you believe your application was denied in error, you may have the option to appeal the lender’s decision. Gather supporting documentation that addresses the lender’s concerns and present your case clearly. Contact the lender to inquire about their appeal process, as some may have specific protocols in place for handling such situations.

What steps can you take to improve your chances next time?

To improve your chances of approval in the future, focus on enhancing your credit score, reducing your debt-to-income ratio, and ensuring you have sufficient equity in your home. Additionally, gathering all necessary documentation and presenting a strong financial picture can help strengthen your application. Consider consulting with financial advisors to develop a tailored plan for improving your eligibility for home equity loans.

What are the long-term financial implications of a home equity loan?

Taking out a home equity loan can have significant long-term financial implications that borrowers should carefully consider before proceeding. Understanding these implications can help you gauge whether this borrowing option aligns with your financial goals.

How does it affect your overall financial health?

A home equity loan can impact your overall financial health by increasing your debt load and affecting your cash flow. While it can provide access to funds for important expenses, such as home improvements or debt consolidation, it also requires careful management to prevent financial strain. Regularly reviewing your budget and financial goals is essential for ensuring that the loan supports your long-term well-being.

What happens if home values decrease?

If home values decrease after taking out a home equity loan, you may find yourself in a situation where you owe more than your home is worth. This condition, known as being “underwater,” can limit your options for refinancing or selling your home. It’s vital to consider market conditions and potential fluctuations in property values when borrowing against your home equity.

Can it impact your retirement plans?

Utilizing a home equity loan can impact your retirement plans by affecting your overall debt load and available cash flow during retirement years. If you rely on home equity to fund retirement expenses, you may face challenges if your home’s value decreases or if your income is lower than expected. Planning carefully for how a home equity loan fits into your long-term financial strategy is essential for securing a comfortable retirement.

How can you use a home equity loan wisely?

Using a home equity loan wisely involves understanding the best practices for borrowing and ensuring you’re making responsible financial decisions. This approach can help you maximize the benefits of your loan while minimizing risks.

What are appropriate uses for home equity funds?

Appropriate uses for home equity funds include home improvements, debt consolidation, or funding education costs. These investments can enhance your property’s value or lower your overall debt burden, making them responsible choices. However, using home equity for discretionary spending, such as vacations or luxury items, may not be advisable, as it can lead to financial strain.

How can you avoid pitfalls?

To avoid pitfalls associated with home equity loans, carefully assess your financial situation before borrowing and ensure you have a solid repayment plan. Avoid taking out loans that exceed your ability to repay and maintain a budget that accommodates your new loan payments. Consulting with financial advisors can also provide valuable insights into responsible borrowing and help you navigate potential challenges.

What budgeting strategies should you apply?

Implementing effective budgeting strategies can help you manage your home equity loan payments and overall financial health. Create a comprehensive budget that includes your loan payments, other debts, and essential living expenses. Regularly review and adjust your budget as needed to ensure you remain on track with your financial goals and can comfortably manage your obligations.

What resources are available for first-time home equity loan borrowers?

First-time home equity loan borrowers have access to various resources that can guide them through the borrowing process and enhance their understanding of home equity loans.

What online resources can help?

Online resources such as government websites, financial education platforms, and reputable financial blogs provide valuable information for first-time borrowers. Websites like the Consumer Financial Protection Bureau (CFPB) offer guides on home equity loans, including tips for comparing lenders and understanding loan terms. Utilizing these resources can empower you to make informed decisions throughout the borrowing process.

Are there financial advisors you can consult?

Consulting with a financial advisor can provide personalized guidance and strategies tailored to your financial situation. Advisors can help you assess your borrowing needs, improve your credit score, and develop a repayment plan. Finding a certified financial planner with experience in home equity loans can be particularly beneficial for first-time borrowers.

What community programs offer assistance?

Many community programs offer assistance for first-time home equity loan borrowers, including local housing authorities and nonprofit organizations. These programs may provide financial counseling, educational workshops, or even grants to help with home improvements. Researching available programs in your area can uncover additional resources to support your borrowing journey.

How often should you review your credit report?

Regularly reviewing your credit report is essential for maintaining good financial health and understanding your credit status. Aim to check your credit report at least once a year to stay informed about your credit profile.

What are the benefits of regular credit monitoring?

Regular credit monitoring allows you to track changes in your credit score and identify any inaccuracies or potential fraud. By staying informed, you can address issues early and take proactive steps to improve your credit health. Additionally, monitoring your credit can help you make informed decisions regarding borrowing and financial planning.

How can you access your credit report?

You can access your credit report for free once a year from each of the three major credit bureaus—Experian, TransUnion, and Equifax—through AnnualCreditReport.com. Additionally, many financial institutions and credit monitoring services offer free access to your credit report and score, allowing you to monitor your credit health year-round.

What should you do if you find errors?

If you find errors on your credit report, it’s essential to dispute them promptly. Contact the credit bureau reporting the error and provide documentation supporting your claim. Under the Fair Credit Reporting Act, bureaus are required to investigate disputes and correct inaccuracies. Addressing errors quickly can help protect your credit score and ensure your financial history is accurately represented.

Is it possible to negotiate terms on a home equity loan?

Yes, it is often possible to negotiate terms on a home equity loan, including interest rates, fees, and repayment terms. Being informed and prepared can enhance your negotiating power.

What terms are typically negotiable?

Common negotiable terms include interest rates, closing costs, and application fees. Some lenders may also be open to adjusting repayment terms or waiving certain fees to secure your business. Understanding what is negotiable can help you advocate for better terms during the loan application process.

How can you prepare for negotiations?

Preparing for negotiations involves researching current market rates, understanding your financial position, and determining your ideal loan terms. Be ready to present your case clearly, highlighting your strengths as a borrower, such as a stable income or a strong credit profile. Being well-prepared can improve your chances of securing favorable terms.

What strategies work best?

Effective negotiation strategies include being polite yet firm, highlighting your research on market rates, and being willing to walk away if the terms are not satisfactory. Demonstrating your understanding of the lending process and the value of your business can also strengthen your negotiating position. Consider approaching multiple lenders to compare offers, which can provide leverage during negotiations.

What are the consequences of using a home equity loan for debt consolidation?

Using a home equity loan for debt consolidation can have both positive and negative consequences. Understanding these implications is essential for making informed financial decisions.

How can it help manage debt?

Debt consolidation through a home equity loan can simplify your finances by combining multiple debts into a single monthly payment, often at a lower interest rate. This can reduce your overall interest costs and help you pay off debt more efficiently. Additionally, it can enhance cash flow by lowering monthly payments, making it easier to manage your budget.

What are the risks involved?

While consolidating debt with a home equity loan can be beneficial, it also carries risks. If you fail to make payments, you risk losing your home due to foreclosure, as the loan is secured by your property. Additionally, consolidating debt does not address the underlying spending habits that may have led to debt accumulation, so it’s important to implement budgetary changes after consolidation.

Is it always a good idea?

Using a home equity loan for debt consolidation is not always a good idea, especially if you have high levels of unsecured debt or a history of financial instability. It’s crucial to carefully evaluate your financial situation and consider alternatives, such as credit counseling or debt management plans, before proceeding with a home equity loan for consolidation. Ultimately, the decision should align with your long-term financial goals and stability.

Mini FAQ

1. Is a 680 credit score good enough for a home equity loan? Yes, it is generally considered fair to good, but higher scores may yield better terms.

2. What are the typical fees associated with home equity loans? Application fees, appraisal fees, and closing costs are common; these can vary by lender.

3. How can I improve my credit score before applying? Pay down debts, make timely payments, and dispute any inaccuracies on your credit report.

4. What are the risks of defaulting on a home equity loan? Defaulting can lead to foreclosure on your home and significant damage to your credit score.

5. Can I negotiate terms on my home equity loan? Yes, many terms, including interest rates and fees, are negotiable.

6. How does a home equity loan affect my credit score? It can lower your score initially due to increased debt but can improve it with responsible repayment.

7. Are interest payments on home equity loans tax-deductible? Yes, but only if the funds are used for qualified expenses; consult a tax professional for specifics.