Can You Deduct Medical Insurance Premiums from

Income to Qualify for a USDA Guaranteed Rural Home Loan?

If you work with the USDA Guaranteed Rural Home Loan program you are aware that not only do you have to qualify the borrower based on normal Debt to Income Ratios, but there is also an income cap on how much a household can earn.

After taking all household income into account, you can then take qualified deductions away to lower the household income. Without going into all of these, I received an email today from the USDA clarifying how Pre-Tax Insurance Premiums are treated. Basically, you cannot deduct the premiums from Income. AND, you need to use the Gross Income before the premiums have been taken out.

Here is the memo.

"September 17, 2009


Medical Deductions and Annual Income Calculations

Due to questions surrounding the treatment of pre-tax medical plans, the following is provided to supplement and further clarify the interpretation of deducting medical expenses in the calculation of annual income.

Section 1980.347 of RD Instruction 1980-D provides instruction on the types of income to be considered in the annual income calculation.

Section 1980.347(e) describes the types of income that are not included in the annual income calculation, but may be considered in determining repayment ability.  Section 1980.347(e)(6) of the instruction indicates:

"Amounts which are granted specifically for, or in reimbursement of, the cost of medical expenses."

This section does not allow for lenders to deduct the pre-tax medical premiums that applicants pay with wages earned towards their medical/dental/vision health benefits offered by their employers.  These pre-tax employee premiums must be considered by lenders as gross income and utilized when calculating annual income.

Lenders seeking guidance on deducting eligible medical expenses for elderly applicants should refer to Section 1980.348(b) and 1980.348(d)(1) of RD Instruction 1980-D.

Questions regarding this notice may be directed to your state GRH coordinator or the division at 202.720.1452.

The Good news is that a low incoem borrower will qualify for more home since their Gross Income will be slightly higher. The bad news is that it may disqualify some borrowers who now make too much income.

Newberg Oregon Starter Home

3 Bd/2 Bth for $217,500 RMLS # 9064974

3519 Burlington Drive, Newberg OR 97132

This Newberg, Oregon Home qualifies for 100% Financing!!

USDA Guaranteed Rural Home Loan Program 

Beautiful 3 bedroom, 2 bath home close to a community park and downtown. Pictures and words do not do this home justice.
This is a MUST SEE.

Newberg is an excellent town for first time homebuyers. It is a beautiful, small town at the entrance to Yamhill County's wine country. Home to George Fox University, it is not that far from Portland, Salem or the Oregon Coast. Close enough to Portland to tsake advantage of all Portland has to offer, but far enough away for home prices to be reasonable.

Listed by:

Todd and Leslie McCabe
John L Scott Real Estate

Contact Broker

Newberg First Time Home Buyers are able to purchase a home with:
100% Financing with NO monthly Mortgage Insurance
$0 Down Payment
Up to 6% Seller Concessions that can be applied towards your Closing Costs.
Simplified Appraisal Process

There are Income Qualifiers. You can't make to much or to little.

Find out if YOU qualify..

Get Pre-Approved today!!
OR
Local Clients Call: 503-421-0096
Not in the Area? Call: 1-888-660-2842 and Ask for Larry

View all of our FEATURED HOMES here!!

Use our FREE Search Engine to find your Oregon Home.

 Forest Grove Starter Home

 Remodelled 1910 Farm House
in Forest Grove, Oregon

 2503 A St, Forest Grove, OR 97116 

 This Home now qualifies for 100% Financing!!

The USDA has loosened their guidelines recently to allow Forest Grove to qualify under the USDA Guaranteed Rural Home Loan program

Check out more pictures of this house by

CLICKING HERE!

Beautiful 3 bedroom, 2 bath home close to Pacific University, downtown, quaint shops and parks. Pictures and words do not do this home justuce.
This is a MUST SEE.

Forest Grove is a beautiful, small town at the base of the Oregon Coast Range. It is not that far from Portland or the Oregon Coast.

 Listed by:

Todd and Leslie McCabe
John L Scott Real Estate 

Contact Broker 

Forest Grove First Time Home Buyers are now able to purchase a home with:
100% Financing with NO monthly Mortgage Insurance
$0 Down Payment
Up to 6% Seller Concessions that can be applied towards your Closing Costs.
Simplified Appraisal Process

There are Income Qualifiers. You can't make to much or to little.

Find out if YOU qualify.. 

Get Pre-Approved today!!
OR
Local Clients Call: 503-421-0096
Not in the Area? Call: 1-888-660-2842 and Ask for Larry

View all of our FEATURED HOMES here!!

 Use our FREE Search Engine to find your Oregon Home.

Central Oregon Riverfront Property on Pringle Falls

Thesa Chambers, my go to real estate professional in Central Oregon, has a wonderful listing on The Big Deschutes River. Located in a cute community of Wild River, this home is a must see.

One of my dreams is to own a riverfront home. Especially on a super Trout stream like The Big Deschutes River. I can just imagine waking up in the morning and taking my fly fishing pole out for a quick fish before work, and then having a cup of coffee on the deck with the sound of Pringle Falls and The Big Deschutes River comforting me.

As Thesa says, this is one of the best real estate deals in Central Oregon at $239,900.

Oh, did I mention that the community is wired? Make this your home office and telecommute!

If you are looking for a home to live in, financing is available through the USDA Guaranteed Rural Home Loan program at 100% with no monthly mortgage insurance. Click here for more info on the USDA program.

If your income disqualifies you from the USDA program, the FHA has financing with 3 1/2% down. Click here for more info on the FHA loan.

For a 2nd home, you will need a little more cash down, but rates are still historically low!!

Better hurry on this one. I'm tempted to make an offer myself!!

Call me for the financing of this great property.

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