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Can you Buy a Home while Receiving Social Security Disability Benefits?

Many people who receive Social Security Disability benefits wonder if it is possible to own their own home, or if they will be stuck renting for the rest of their lives. There are many preconceived notions about people who receive Social Security Disability being unable to qualify for a mortgage. They fear that they do not have enough income or that the fact that they are on disability and not employed will get in the way of qualifying for a mortgage loan. This isn't necessarily the case. Many people who receive Social Security Disability benefits can qualify to buy a home and there are programs in place to help disabled individuals qualify for a mortgage. If you are receiving Social Security Disability benefits and you want to purchase a home of your own, there are some things you need to know.

Your Credit Score and Income

No matter what type of mortgage you are applying for, lenders will look at your credit score and income when determining whether or not to approve you for a loan. That does not mean, however, that you will not be able to purchase a home if your credit score is less than perfect or if your income is limited to your Social Security Disability benefits. There are programs in place for disabled individuals to help overcome the obstacles of imperfect credit and limited resources.

Programs to Help You Buy a Home

If you are receiving Social Security Disability benefits, there are programs that can help you purchase the home you need. The Fannie Mae Community HomeChoice program provides assistance to disabled individuals who want to purchase a home but have limited income. Even if your credit rating has suffered, you may qualify for a home loan under this program when receiving Social Security Disability, depending on your Monthly Benefit Amount (MBA). Fannie Mae can also provide you with a loan that will allow you to make improvements to the home you buy if those improvements are directly related to your disabling condition.

Another program that you may want to look into is Section 8. Many people assume that Section 8 assistance is only for renters, when in reality the program can also help you purchase a home. If you qualify for Section 8 and your local Section 8 office participates in the home ownership program, you can receive assistance in making your monthly mortgage payments, making home ownership more affordable.

Habitat For Humanity is another program that can help people who receive Social Security Disability enjoy the benefits of home ownership. The program is geared towards low-income families and provides low-interest mortgages ranging from seven to thirty years. In many cases you need to put “sweat equity” into the purchase of your home, but if you are unable to help with the construction of your home due to a disability you may be able to work out alternative arrangements.

Down Payment Issues

If you receive Social Security Disability and you are able to qualify for a mortgage program, you may be worried about coming up with the down payment for the purchase of your home. Fortunately, there are creative financing options available to help you meet your down payment requirements.

The Fannie Mae program discussed earlier may require a down payment of as little as $500 when you are receiving Social Security Disability. For other programs you may want to consider “sweat equity” options or you may want to offer full price for the home if the seller is willing to “gift” the down payment.

When receiving Social Security Disability, you can also look into grants or gifts for your down payment needs. Some programs, such as the IDA program, allows you to save money towards your down payment and will match part or all of the money you put into the IDA account to be used for the purchase of a home. So if, for example, you have saved $1,000 from your Social Security Disability benefits towards your down payment, the matching gift would be $1,000, giving you a total of $2,000 to put down on your home purchase.

Making Ownership a Reality

If you are receiving Social Security Disability and you want to purchase a home, there are resources out there to help you do it. Many organizations want to help those who are on Social Security Disability realize the dream of home ownership. Look into the programs mentioned above and see which ones you qualify for. If you use one of the programs to purchase a home, you can start putting part of your Social Security Disability benefits towards owning your home instead of putting rent in your landlord's pocket.

Comments

After being stuck as a renter all of my adult life, I finally found a small house which I can afford to buy on my limited SSI income. To qualify for the loan, however, I had to come up with a 15% downpayment. This money is being given to me by a relation, and will be transferred towards the home purchase within days. I'm concerned that SSI will count that downpayment as income and stop or reduce my monthly income! Do I need to worry? I won't be able to buy the house if my income changes.

I have called my ss office so many times and leaving messages telling them I want to start saving for down payment on a house. As far as im concerned if you have told them its ok. I just put my down payment down and am near closing on my house. I really hope something bad doesnt happen because I have left over 3 messages telling them I would be doing so. I am also going to ask about their work program since I have been feeling better than ever before and want to be independant. Im really excited about it and just hope all this works out ok. It worries me. Before I got benefits I recall them saying you can only have up to 2k in the bank at once UNLESS saving for a down payment on a home so..... Ive been looking it up online to find out more info but cant find anything.

You don't necessarily have your benefits saved in the bank. I've asked this before, and they say that although you can't have more than 2k in the bank, you can save it as cash instead. They just don't want you to have 2k in your bank account for certain reasons.

I would like to purchase a home and wondered if the downpayment or purchase would affect my benefits. A relative may be helping with the down payment and how would that affect my benefits?

I would also like to know if purchasing a home would reduce or change my benefits. Also, if a relative were to give me a sum for or toward the down payment would that jeopardize my disability income.

if someone is on SSD and there kids as well are receiving benefits, can they own 2 homes?

Thanks for the excellent summation of options for these recipient categories. Info elsewhere seems very sparse, for such a big ol' Internet.