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

Submitted by Shane on Tue, 11/16/2010 - 14:16

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. Habitat for Humanity programs are organized at the community level, and so eligibility rules may differ between local organizations.

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.

Blog comments

jessy (not verified)

Hi, I don't know how I found this site but iam happy I did. Iam 56 yrs old,female on ssd. I receive 770$ a month, my question is would I qualify for ssi to. I had 3 surgery's on my spine why am I getting so little money. I do wanna purchase a home with gods will, my rent is 620$ a months and every yr it goes up 10$.

Sat, 09/10/2016 - 17:45 Permalink
Bryan

In reply to by jessy (not verified)

Hi Jessy,
You may not be able to qualify for SSI, as it is income based and you are receiving more than the federal benefit limit of 733 a month.

Mon, 09/12/2016 - 15:09 Permalink
Anonymous (not verified)

Hi, my fiance and i just bought a home in march of 2016,she is on ssdi and im on ssi.we qualified for a home loan.our credit scores are fairly good 670/700,
combined monthly income of 1,560.00.. cost of home 84,000 monthly payment of 592.00.just thought i would throw some real numbers out there for people in the same situation...

Tue, 09/13/2016 - 01:34 Permalink
Bryan

In reply to by Anonymous (not verified)

Hi there,
Thank you for sharing that! It's sometimes really hard for people to get a handle on what they may be able to afford, and this can definitely help people.

Tue, 09/13/2016 - 09:05 Permalink
Bryan

In reply to by Debbie knabe (not verified)

Hi Debbie,
You can start applying by going to www.ssa.gov or calling the SSA at 1-800-772-1213. It may be a good idea to contact a disability advocate or attorney, as they can help maximize the chances of you winning your case. We can have one reach out to you if you fill out the form on the left, or by going here:
http://www.disability-benefits-help.org/form/free-disability-evaluation

Wed, 09/21/2016 - 09:35 Permalink
Geeta (not verified)

I m 68 year old women. My primary residence is under my name and my son's name, which does not have any mortgage. I get monthly $650 SSI. My son want to take equity loan from that house to do some remodeling of primary house. Will this effect on my Social Security benefits. please advise

Wed, 09/21/2016 - 14:42 Permalink
Bryan

In reply to by Geeta (not verified)

Hi Geeta,
If your son takes the equity loan, it may not be considered income on your part, and as such your benefits may not be affected. However, it may be a good idea to contact the SSA regarding this just to make sure.

Wed, 09/21/2016 - 17:01 Permalink
Rosa (not verified)

Thank you so much for this very helpful information, I was told from this program call Hud the it was impossible with a 1,350 a month income from ssI to be eligible for any 2family home. I was so disappointed the I cry. But I had a feeling something was wrong. She said maybe!! With a 5,000 down payment and I will qualify for one of does small condos, not a 2 fam. Like I mention. Waoo..Thank-you so much

Thu, 09/22/2016 - 22:20 Permalink
Bryan

In reply to by Thayer Jordan (not verified)

Hi Thayer,
Yes to both, however the person on SSI may need to coordinate with the SSA regarding this because there may be circumstances that would change the SSI recipient's eligibility for benefits.

Mon, 09/26/2016 - 14:01 Permalink
Briana (not verified)

Hi. I receive SSI and SSDI. I own my home and would like to sell it and purchase another. How will this affect my benefits?

Mon, 09/26/2016 - 21:53 Permalink
Bryan

In reply to by Briana (not verified)

It may under certain circumstances. The income received for the house may be considered income for the month you receive it. It may be a good idea to contact the SSA office in your area to co-ordinate this with them and avoid any confusion/loss of benefits.

Tue, 09/27/2016 - 11:26 Permalink
Stephanie (not verified)

I have been on ssi for almost 5 years.y children receive the caretaker supplement plan...together we get $1,216. We are constantly broke due to expensive rent. Is there a way for us to purchase/build a home to call ours? I don't really understand the whole $2,000 "value" talk...I feel its time I have something of my own.

Sun, 10/02/2016 - 10:44 Permalink
Donna (not verified)

when i was still married we bought some land with a trailer on it( our son was 5 months old).later had a house handicap accessible built for our disabled son in 2006(he was 8 at the time) so that later he could stay in this home instead of having to go to a "state run home". in 2010 i got divorced from his father. instead of child support the ex promised to pay the mortgages to keep our son in his own home until it was paid off. since then the ex has remarried. now that our son is 18 the ex will stop paying the mortgages next year when he turns 19. my son only gets $488 now & next year it only goes up to $773. our mortgages are $1089 for 1st & $255 for the second. i've tried to refinance but one(not even fannie mae or freddy mac)could help us. how can i keep my son in the only area and home he has ever known. what programs might be available for us?

Sun, 10/16/2016 - 20:25 Permalink
Bryan

In reply to by erik (not verified)

Hi Erik,
She may be able to, but many banks may not find a cosigner on SSI acceptable because the income and resource limits placed on people who are on SSI may make it harder for them to cover the loan if the person applying cannot cover the loan.

Mon, 10/24/2016 - 09:51 Permalink
Karen (not verified)

I went off my disability and have been working. But recently had 2 more blood clots and am going to have to go part time or quit all together. I have been trying to keep working thinking I would have a better shot at a loan, but dont think I can hold out. How bad will it look if I have to quit and get back on disability before getting a loan??

Sat, 11/05/2016 - 17:29 Permalink
Laurie (not verified)

I am a 52-year-old single woman, receiving only $878 monthly for my social security disability benefit. I have been able to maintain an 846 Fico score. I would very much like to put my money towards a mortgage, and not waste anymore of my limited income on rental cost. Is there a program that would work best for me? I do not have money for a down payment of course, but I do have a roommate/sublet lined up. For three years I have filled out every housing Boucher program application that comes available. And despite checking a box for disabled, I have never even been able to get into the second round of the pre-application. There has got to be a better way…

Tue, 11/08/2016 - 18:31 Permalink
Adelaide McAllister (not verified)

I have a brother in law that receives disability. He goes on criuises, drives a bmw, buys homes. He hasn't worked in 25 years. Its disgusting how he's able to work this system..disgusting.

Sat, 11/12/2016 - 14:13 Permalink
Bryan

In reply to by Anonymous (not verified)

Hi there,
They may be if that house is not your primary residence, it may be a good idea to contact your local SSA office, they may be able to help you through the process.

Mon, 11/14/2016 - 09:41 Permalink
lisa (not verified)

My fiancee n i both on dissability and we have option to buy our home so we dont have to move due to our landlord passing away and his wife is giving them.up what is the best program when we have bad credit.....n we want in worst way to purchase our first home together pls any help n advice would be appreciative.......thank you sincerely lisa n jerry

Sun, 11/13/2016 - 14:51 Permalink
Pete (not verified)

Hello , in in same situation I'm on PERMANENT SSI DISABILITY getting 1,020 a month I'm selling my condo and want to buy a home in Oregon I will be putting 120k down on a 240k house does anyone know if I can get a LOAN for the Rest ... I am putting 120k DOWN on home

Tue, 11/15/2016 - 21:42 Permalink
Bryan

In reply to by Pete (not verified)

Hi Pete,
Receiving disability may not affect the ability to get a loan, however I really could not say as every case is different.

Wed, 11/16/2016 - 10:17 Permalink

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