Many recipients of the Social Security disability benefits or Supplemental Security Income (SSI) mistakenly believe that their dream of homeownership is out of their reach. Although buying a house while on disability or SSI is not an easy task, it is nevertheless doable.
So how can you qualify for a home when receiving disability or SSI?
Those who receive disability benefits or SSI might not qualify for a traditional conventional mortgage, but chances are that they are eligible for different programs that will help them become homeowners.
1. How to save for a down payment while on disability or SSI?
One of the hardest things to do when you are on a limited budget is saving for a down payment while renting a home or an apartment.
In addition, one of the obstacles the aspiring homeowner will encounter early on is the rule established by the Social Security Administration that prevents SSI beneficiaries to have more than $2,000 in assets if a single person, or more than $3,000 if a married couple. This rule does not include a house if it is used as a primary residence, but it will affect the ability of the beneficiary to save for a down payment. Individuals receiving Social Security Disability insurance (SSDI) are not subject to the same asset limits.
Thankfully, several programs conceived for people on disability or SSI only require a very low down payment or will help with some creative financing solutions to qualify.
If you receive disability, the FannieMae Community Home Choice program might be a good fit for you. It allows individuals with a low credit score to qualify for a home loan under certain conditions and only requires a down payment as low as $500 in some cases.
The Individual Development Account programs (IDA) are designed to help individuals facing hardship such as disability to build financial capacity. They vary by state. Some will match part at the money you put in the account if destined to be used as a down payment.
2. Which can programs help individuals receiving disability or SSI qualify for a home?
Besides receiving help for a down payments, you can also find alternatives to traditional mortgages to qualify for a home.
Some local Section 8 offices participate in the Housing Chance Voucher program which covers, amongst other things, your mortgage principal and interest and mortgage insurance. If you are a recipient from Section 8, it is worth checking if your local Public Housing Authority takes part in this program and if you qualify. If you do, you could pay as low as 30% of your adjusted monthly income for your housing.
Habitat for Humanity offers a program designed to help low-income families including those receiving Social security disability to achieve home ownership thanks to low-interest mortgages ranging from seven to thirty years as long as the future homeowner is willing to put in some “sweat equity” by either taking an active part in building his own home or others, or volunteering in a Habitat ReStore.
If you are interested in buying a house outside of city limits, you might qualify for a USDA loan under their Guaranteed program if your income is below 115% of your Area Medium Income (AMI) or their Direct program if your income is between 50 and 80% of the AMI.
Veterans might be eligible for some specific programs such as VA Home Loans for Disabled Veterans or Homes for our Troops.
Although achieving homeownership can seem daunting while you are on disability or SSI, there are numerous programs that can help you qualify for a home. Don’t hesitate to ask for help!