Buying a home can be a challenging process no matter what your circumstances. And it’s true — buying a home is like nothing else, in good and stressful ways. But it’s often easier than people think, especially once you understand the financial eligibility requirements.
Getting approved for a loan comes largely down to your income. Fortunately, a range of income types may be used to qualify, including salary, investments, disability benefits, and other sources of income.
Financial assistance programs can also give you an extra boost toward homeownership if you need help saving for a down payment or closing costs.
Buying a home as a person with a disability works the same as it does for anyone else, and we’ll explain the ins and outs so you’ll feel empowered to claim your piece of the American dream.
What's in this Article?
A fair chance at homeownership
Federal law prohibits mortgage lenders from discriminating against homebuyers who have disabilities.
The Fair Housing Act of 1968 barred lenders and home sellers from discriminating based on a borrower’s or homebuyer’s disability. A generation later, the Americans with Disabilities Act of 1990 added more protections by standardizing building codes.
Today, these laws have helped improve quality of life for Americans with disabilities.
Lenders cannot deny you a loan based on the type of disability you have, nor can they discriminate against you if you receive public assistance income.
That doesn’t guarantee you a home loan. You’ll still need to meet credit score, down payment, income, and other requirements.
But, it does mean that lenders must treat you like everyone else who applies for a mortgage.
The National Association of Realtors® explains that homebuyers with disabilities have the right to:
- Access to affordable housing within their price range
- Non-discrimination from lenders, insurance companies, and appraisers
- Reasonable accommodations made for their disabilities
- No discrimination-based restrictions on the communities or housing complexes in which they might choose to live
Additionally, real estate agents cannot discriminate against homebuyers based on a disability. They are also legally barred from complying with requests from sellers and landlords to discriminate against disabled buyers or tenants.
In short, every person is entitled to — and deserves — a fair chance at homeownership under the law.
How to buy a home using disability income
Proof of income is one of the biggest factors in whether you qualify for a home loan.
Lenders need to know that you can afford the monthly mortgage payment, whether that’s from wages earned at your job, disability income, or a combination of the two.
So if all, or part, of your income comes from disability benefits, your lender will want to know all the details. That includes the type of disability benefits you receive and how long you’ll be eligible to receive them.
Now, if you are a low-income borrower or you’re on a fixed income, that’s OK. The lender will just need to verify that you have enough income to afford payments on the home you want to buy, and that your debt-to-income ratio (DTI) is in a qualifying range.
Your DTI represents how much of your monthly income goes toward debts — including housing payments, credit cards, student loans, and other loans. The maximum DTI allowed depends on the type of loan program you want to use, though generally speaking you’ll want it to be 50% or less.
Some lenders and programs have more flexible criteria than others, though, which is why it’s always a good idea to request quotes from at least three mortgage lending companies.
How to buy a home on Social Security Disability Insurance (SSDI)
Social Security Disability Insurance, or SSDI, is a federally funded insurance program that pays monthly disability benefits to people who can’t work because of physical or mental disabilities.
The average SSDI recipient receives more than $1,400 a month in benefits. Mortgage underwriters can typically count these benefits as income when you apply for a loan.
You will need to provide documents showing that your Social Security Disability benefits won’t expire for at least three years. Your case manager at the Social Security Administration (SSA) can help you provide the right documents and advise you on the types of information you’re required — and not required — to provide.
Do I need to disclose my disability?
Lenders should not request information about the nature of your disability, according to the Consumer Financial Protection Bureau (CFPB).
In the past, lenders have asked for this information to determine the likelihood that a borrower would continue to receive SSDI benefits, the CFPB states. This is because SSDI verification documents do not include how long a borrower is eligible for benefits, only that they are receiving them now.
But the CFPB website states that lenders should only examine the SSA benefit verification document for an expiration date: “Unless the SSA letter specifically states that benefits will expire within three years of loan origination, lenders should treat the benefits as likely to continue.”
Similar guidelines are in place for FHA loans, VA loans, and conventional loans backed by Fannie Mae and Freddie Mac. So regardless of your loan program, it is highly unlikely you will be required to disclose your disability to qualify for a mortgage.
It’s possible to qualify for a home loan solely using SSDI benefits, depending on the price of the home.
But some people with disabilities also receive Supplemental Security Income (SSI). This income, when properly documented, can also be used to qualify for a mortgage.
What about long-term disability income from an employer or insurance company?
Payments from a long-term disability insurance policy can help satisfy a mortgage loan’s income requirements, depending on the loan program guidelines and the lender’s criteria. If you plan to use this form of income, your lender will ask for a copy of the insurance policy to verify the income and ongoing coverage.
As with SSDI, a loan officer shouldn’t ask about the type of disability you have. The policy showing you’re eligible for ongoing benefits should be enough to count your disability benefits as income.
Ultimately, that’s the lender’s concern: documenting income and finances to ensure you can afford your mortgage payments.
What if I have a disability and I am not receiving any disability income?
If you’re disabled but do not receive SSDI or other long-term disability benefits, you’ll need to show some other source of income to qualify for a home loan.
The income can come from your job, investments, or other sources such as alimony payments. As with disability income, you’ll need to show proof of these income types and that they are likely to continue for at least three more years.
Some loan programs, which we’ll cover in the next section, allow you to apply with a co-borrower, and their income can count toward your eligibility as well.
The right mortgage for you
Your credit score, debt, income, and down payment will make or break your mortgage application.
Fortunately, mortgage lenders offer a variety of loan programs to help applicants in all circumstances buy homes.
There are no programs designed specifically for homebuyers with disabilities. But there is a range of loan types, and your loan officer can help you determine which one is right for you.
Conventional loans are the most common types of mortgages. First-time homebuyers (including those who have not owned a home in the past three years) may qualify for a conventional loan with as little as 3% down. You typically need a credit score of 620 or higher and a DTI of 45% or less to be eligible for a conventional loan, though you may be able to qualify with a higher DTI if your loan program or scenario allows for it.
There are several different conventional loan options, some of which have no income restrictions, so you can qualify with a very high salary. But there are also programs, listed below, which enable low- and moderate-income borrowers to take out conventional mortgages as well.
Freddie Mac Home Possible
Freddie Mac’s Home Possible program is a conventional loan program geared toward low- and moderate-income borrowers who earn 80% or less of the area median income (AMI).
Program features include:
- Allows non-occupant co-borrowers: This means a family member or friend who won’t live with you in the new home can apply with you, and they can strengthen your application if they have steady income and good credit
- Requires a low down payment: The minimum down payment is 3%. For a $200,000 home, 3% equals $6,000, and Freddie Mac allows you to use gift funds, grants, and secondary financing (another loan) to make your down payment
- Several eligible property types: You can use a Home Possible loan to purchase a single-family home, a property with up to four units, a condo, manufactured home, or a planned unit development
- Cancel PMI at 20% equity: Unlike some low down payment government loans, you can stop paying private mortgage insurance (PMI) on a Home Possible loan once you’ve reached 20% home equity
Fannie Mae HomeReady
Fannie Mae’s HomeReady loan resembles Freddie Mac’s Home Possible program and is also a conventional mortgage.
You can get into a home with as little as 3% down, and non-occupant co-borrowers are allowed.
But with HomeReady, you can also count income from an approved type boarder, such as a live-in personal assistance who pays you rent. The additional income may increase your homebuying power, and you may be able to buy a larger or more expensive home.
Both the HomeReady and Home Possible programs typically require credit scores of 620 or higher to qualify. If your score is lower than that, you may need to consider government-backed loans (FHA, VA, USDA) instead.
Fannie Mae Family Opportunity Mortgage
If a parent, adult child, or another family member would like to buy a home for you, the Fannie Mae Family Opportunity Mortgage program may be a good option for financing that purchase.
This program allows lenders to extend mortgage rates and terms normally reserved for homebuyers who are purchasing a primary residence. Usually, when someone buys a home they do not plan to live in (such as a second or investment home), they need a larger down payment and will pay higher interest rates.
But with a Family Opportunity Mortgage, a relative can buy the home for you at a lower rate and down payment, creating a more affordable path to homeownership for you and your relative.
If your score dips as low as 500, you may still qualify, though you’ll need a 10% down payment.
Like most home loans, FHA lets you qualify with disability income as long as it’s properly documented.
FHA loans require upfront and ongoing mortgage insurance premiums (MIP). However, the upfront fee, which is 1.75% of your mortgage, can be rolled into the loan. Or, it can be paid at closing, and the FHA allows you to use gift funds toward both your down payment and closing costs.
So you may be able to cover the upfront MIP through gift funds or closing cost assistance rather than paying it from your own savings or income.
The annual MIP rate depends on the size of your loan and your down payment amount. But most FHA borrowers put down 3.5% and pay an annual premium of 0.85% for the life of the loan.
You can stop paying MIP if you refinance to a conventional loan when you reach 20% equity in the home.
Related reading: FHA Loan Requirements 2021 | Rates & Eligibility
Active-duty servicemembers, veterans, and some surviving military spouses can qualify for VA home loans. These offer an uncommon combination of benefits: no down payment*, no loan limits (for borrowers with full entitlement), and no ongoing mortgage insurance premiums.
VA loans do require an upfront funding fee, which is charged as a percentage of your loan amount. Funding rates depend on whether you are a first-time VA borrower and the size of your down payment. If you have a service-related disability, however, you may be exempt from this fee.
The Department of Veterans Affairs (VA), which insures VA loans, allows you to qualify with Social Security and VA disability benefits.
The VA also offers Specially Adapted Housing (SAH) grants of more than $100,000 to veterans with certain service-related disabilities. The grants can be used toward buying, building, or modifying a home, as long as it will be their primary residence.
Related reading: Absolutely Everything to Know About the VA Home Loan in 2021
USDA loans are designed to make homeownership affordable for low- and moderate-income homebuyers in qualifying rural and suburban areas.
There are two types of USDA loans. The first, USDA Single-Family Housing Guaranteed Loans, are issued by private lenders.
Qualified homebuyers can get a USDA Guaranteed loan with 0% down, and they can use gift funds or down payment assistance toward their closing costs. That means that if you meet the income limits and you’re buying a house in an eligible area, you could get into the home with very little money upfront.
Like FHA loans, USDA loans have an upfront and annual mortgage insurance requirement. However, both rates are substantially lower than with FHA mortgages.
The upfront USDA guarantee fee is 1% of the loan, which can often be rolled into the mortgage. The annual premium, which adjusts each year based on your loan balance, is 0.35%. USDA annual fees are broken down into 1/12 payments that are included in your monthly mortgage installments.
The USDA also lends money directly to homebuyers through its Single-Family Housing Direct Loan program. These loans are for borrowers with incomes between 60-80% of the Area Median Income where they live.
Most USDA loans are Guaranteed Loans, and borrowers can apply for these through a private mortgage lender.
Down payment assistance and grants
It can be hard to save up cash for even a relatively small down payment. On a $180,000 house, for example, you’d need to save $5,400 to put down 3%.
Plus there are closing costs, which usually total between 2-5% of the loan. If you’re on a limited income, saving for the upfront costs to buy a house can take several years.
Unless you’re getting a VA or USDA loan, which are the only loans on our list with 0% down payment options, you’ll likely need to bring some money to the table.
Fortunately, it doesn’t all have to come from you.
Down payment assistance programs** can help you cover most or all of your down payment, often in the form of a grant or a 0% interest, forgivable second loan. You may also qualify for closing cost assistance, further reducing the amount of money you need out of pocket.
If you use a loan program that allows gift funds, you may be able to combine down payment assistance with gifts from relatives, charitable organizations, or in some cases a friend or employer-assistance program.
To find down payment assistance programs, Google “down payment assistance programs in (your city, state, or county).” Or ask your real estate agent or loan officer about local programs.
You can also look up programs on the Department of Housing and Urban Development (HUD) website. But that list is not exhaustive, and many programs exist at the local level, so be sure to investigate what’s available in your area.
Assistance programs after you buy your home
Homeownership Voucher Program
In addition to down payment assistance, there are also financial programs to help once you’ve bought your new home.
HUD’s Housing Choice Voucher program (HCV), which provides renters with monthly financial assistance, can also be used toward homeownership costs in some instances.
Although the HCV homeownership option is not available in all areas, eligible homebuyers can use their benefits toward qualifying for a mortgage and their monthly housing costs.
Contact your local Public Housing Agency (PHA) office to find out if the program is available in your area.
Help for those who need to make their homes more accessible
Once you’ve become a homeowner, you may identify areas of the house that need to be renovated. What happens if you need to widen doorways, build ramps, or make the shower or sinks more accessible?
Several accessibility grant programs can help you pay for these projects:
- USDA Housing Repair Grant: You could qualify for up to $20,000 in low-interest loans or $7,500 in grants to pay for repairs and adaptations. To qualify, your household income must not exceed 50% of the AMI and you must be unable to get a loan for repairs anywhere else. Some homeowners may qualify for both a loan and grant and can combine the two
- VA Grants for Disabled Veterans: In addition to the SAH grant mentioned above, the VA also offers a Special Housing Adaptation (SHA) grant up to $20,215 to improve mobility in your home. If you qualify for either the SAH or SHA programs, you may also be eligible for a Temporary Residence Adaptation (TRA) grant to modify a relative’s home that you are living in temporarily. TRA grants are available up to $40,637, depending on your eligibility level
- State and local programs: As with down payment assistance programs, local and state agencies can help with home adaptation grants. Start by Googling “grants for homeowners with disabilities in (your city, state, or county)” to find out what’s available. You can also contact your local HUD office for references
Non-profit organizations that offer assistance programs
Government programs aren’t the only source of help for buying a home if you live with a disability. Non-profit organizations can also help you gain access to affordable, safe housing.
Habitat for Humanity
Habitat for Humanity provides affordable housing to low-income applicants, though the homeowners must put “sweat equity” into the property. In some cases, that means helping to build the house. But working in one of Habitat for Humanity’s ReStores or local offices or participating on a Habitat committee can also count.
The organization also requires homeowners to take financial education and budgeting classes.
Habitat for Humanity is active in all 50 states, as well as Washington, D.C. and Puerto Rico.
AmeriCorps’s Rebuilding Together
If you are an older adult, you may be eligible for help from Rebuilding Together, an AmeriCorps program.
Rebuilding Together’s Safe at Home initiative makes safety repairs and accessibility modifications for senior homeowners. The Veterans at Home program offers the same support to veterans and their families, and both programs are at no cost to the homeowners.
Local and disability-specific programs
Local non-profits in your area may offer homeowner assistance as well. Do a Google search or ask your real estate agent, loan officer, or community advocacy groups for references.
Your specific disability may also have an associated non-profit that offers assistance. For example, if you experienced a sudden spinal cord injury, the Travis Roy Foundation offers Quality of Life grants that can be used to adapt your home.
Military veterans who suffered severe injuries during post-9/11 duty may be eligible for specially adapted, accessible homes through the Homes for Our Troops program.
How to buy a house as a person with a disability: FAQs
Yes, you can buy a house if you receive disability benefits. In fact, you can use your Social Security Disability Insurance (SSDI) and Supplemental Security Insurance (SSI) to qualify for a mortgage.
Getting approved for a mortgage comes down to proving you have enough monthly income to make your mortgage payments, as well as meeting your lender’s and specific loan program’s borrower criteria. You can use your disability benefits as proof of income, which can help you get approved for a mortgage loan, as long as it will continue for 3 years. If you’re on short-term disability from work, you may have to return to work full-time before you can qualify. Contact a reputable lender to know for sure.
While there aren’t widespread programs specifically created for homebuyers with disabilities, there are a number of loan options for borrowers who have low income and/or imperfect credit. These include Freddie Mac Home Possible, Fannie Mae HomeReady, and FHA, USDA, and VA loans.
The right loan program can make borrowing possible
If you’ve been unsure whether you can buy a home as a person with a disability, know that you have many options for becoming a homeowner.
Whether you’ve been saving for a home for years, you need down payment and closing cost assistance, or you need help modifying your home to make it safe and accessible, there are programs to address all of these needs. And they’re designed to get creditworthy borrowers into safe, affordable housing so they can live out their dream of homeownership and develop financial stability.
The information in this article does not constitute financial planning. Please consult a financial planner regarding your specific situation. Furthermore, contact your Fairway loan officer for more information regarding your specific situation. Fairway is not affiliated with any government agencies. These materials are not from the VA, HUD, FHA, USDA, or RD, and were not approved by a government agency.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.
*A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits.
**Eligibility subject to program stipulations, qualifying factors, applicable income and debt-to-income (DTI) restrictions, and property limits.