Your Ultimate Guide to Mortgages And Home Loans For People With Disabilities
December 02, 2020
Every person should have the right to safe and accessible housing and the chance to have a home they can call their own. Owning property is one of the most viable ways to build your wealth and contributes largely to the wealth you accumulate by retirement age. Unfortunately, barriers to affordable housing keep many people with disabilities from getting a slice of the homeownership American dream. People with disabilities are no strangers to overcoming barriers and facing discrimination – we wanted to put together this guide to illuminate the various programs and tips that can help make homeownership for people with disabilities a reality.
There are various additional perks to owning a home, and if you’re reading this, you’ve likely weighed the benefits of owning versus renting. If you haven’t, some benefits include better home personalization, tailored accessibility modifications, greater return on investment and greater independence if you’re looking to move away from roommates or family.
You may have also wondered if there are home loans for people with disabilities and how that process works. Below we’ll answer those questions, cover the home buying and loan processes, and go over mortgage programs for people with disabilities. There are a variety of community resources and educational guides for you to explore.
Learn About The Home Buying Process
One of the first things you should do before searching for a home or mortgage is to learn more about the home buying process in general. There are a ton of great resources available online, but you can also reach out to an expert for a more in-depth, tailored look at the process.
Here’s where to start:
- How to buy a home in 2020: Step-by-step
- Home buying checklist
- Buying and selling simultaneously
- How much home can I afford?
- Common home modifications checklist (PDF)
Know Your Credit Score And Improve It If Needed
Your credit plays a valuable role in your home loan options. It’s a great idea to check your score far in advance so you have time to improve it if needed. The average minimum home-buying credit score for a conventional loan is 620 and 580 for FHA loans, but there are other programs for home buyers with low credit. There are steps you can take yourself to repair your credit score, including paying off debt, paying bills on time and disputing incorrect demerits on your credit history. Since a home purchase is such a big decision, it could also be worth it to have credit repair professionals help you out.
Work Through Your Budget And What You’re Looking For
Try using a mortgage calculator to see what you can afford and how that could fit in with your current expenses. Keep in mind that you may need to set aside a renovation budget if the home you end up in doesn’t fit your accessibility standards. Different types of homes have various layouts, so it’s important to know what you’ll want before deep-diving into a home search. Refinancing is an option to help fund home improvements – if you aren’t as well versed in finance, we recommend reaching out to a financial advisor or home loan expert.
Check Out These Must-Know Tips
Some other top tips to keep in mind throughout the process include:
- Asking the right questions: Before meeting with a mortgage expert or Realtor®, make sure you have your list of questions ready to go. Check out these resources:
- Getting preapproved: This can help speed up the purchase process and show you as a more serious buyer.
- Paying for a quality home inspection: Do not skip or skimp on your home inspection. Spending a couple of extra hundred dollars can save you thousands in the long run. You can also use findings to help negotiate a better price.
- Look into additional programs that may apply to you: If you’re a senior, veteran, person of color, first-time buyer or have a lower income, there may be additional programs you can look into aside from those that serve people with disabilities.
FAQ: Can I Buy A House On SSDI Or SSI?
Yes, people on Social Security Disability Insurance (SSDI) or Supplemental Security Insurance (SSI) who qualify for a home purchase can use their benefits to finance this move. Keep in mind that additional properties that aren’t your place of residence are considered assets that could affect your SSI eligibility. SSDI doesn't have asset limits because it's considered an entitlement program rather than a needs-based program like SSI. Talk to a home loan specialist to figure out the details and best plan for your individual situation.
Know Your Housing And Loan Rights
There are a variety of requirements in place to ensure equal housing opportunities. Unfortunately, they aren’t always self-enforced – it’s vital that you understand your rights and are able to recognize when they are being violated. Below you’ll see some important legislation you’re likely already familiar with:
- Americans with Disabilities Act (ADA): Sweeping civil rights law for people with disabilities
- Fair Housing Act (FHA): Prohibits housing discrimination based on disability or other protected classes
- Section 504 of the Rehabilitation Act of 1973: Ensures equal access to HUD financial assistance
Be sure to look into your state and local laws to get the full picture. The following information isn’t intended to be legal advice, so please reach out to an attorney or a disability advocacy agency should you need legal advice. These are both good places to start:
The Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) protects people with disabilities and other protected classes from mortgage discrimination. The Federal Trade Commission (FTC) has great resources on mortgage discrimination, including information on:
- Income: Any reliable public assistance must be considered the same as other income. Social Security, pensions, part-time employment and annuities must also be considered fairly.
- Co-signers: You must be allowed to have a co-signer (that doesn’t have to be your spouse) if one is needed. You are not required to have a co-signer if you meet the lender’s requirements.
- Application outcomes: A lender cannot discourage you, deny your application or impose different terms based on your disability, sex, age, national origin, race, color, religion or marital status (even though you’ll be asked to disclose your sex, race or national origin, it must not be considered).
- Questions: Mortgage lenders are not allowed to ask you any questions related to your condition or disability or ask you if you’re starting/planning to start a family. However, they are allowed to ask about divorce, ethnicity, race (to make sure minorities aren’t routinely being denied) and pending lawsuits.
Violations can be reported via:
- ECOA violations: Consumer Financial Protection Bureau or 855-411-2372
- FHA violations: HUD Complaints or (800) 669-9777; TDD: (800) 927-9275
Reasonable Accommodations: HOA And Neighborhood
If you’re looking to make home modifications, know that under the ADA, you have the right to make “reasonable accommodations” to your residence, which should take precedence over aesthetic guidelines or policies upheld by a homeowner’s association (HOA). Also, you have the right to reasonable accommodations in HOA facilities, like pools and gyms. Your HOA cannot interfere with your right to have your service animal. ADA statutes also apply to the public sidewalks and streets outside your residence.
Also, consider these FHA standards when looking at condominiums and multi-family housing public and communal spaces:
- Accessible entryways, doors, mailboxes, parking, switches and outlets
- Working ramps, railing and elevators
- Usable bathrooms, kitchens and other common spaces
If you have experienced housing discrimination you can reach out to your state-specific programs or HUD:
- HUD Fair Housing
- Call toll-free (800) 669-9777 or TTY (800) 927-9275 (HUD directory)
- Mail a letter to:
U.S. Department of Housing and Urban Development
Office of Fair Housing and Equal Opportunity
451 7th Street, S.W., Room 5204
Washington, DC 20410-2000
- File an online complaint
Consider HUD Housing Counselors
Seeking assistance from a HUD-certified housing counselor is a great idea if the process is new to you or you just want additional guidance. Counselors are available at low to no cost (based on what you can afford). They can advise you on the home buying process and mortgage budgeting. They can also help connect you with local programs and help you figure out housing based on your financial circumstances and accessibility requirements.
- Find a local HUD counselor based on your state
Explore Federal Loans And Home Programs For People With Disabilities
We’ll review five different homeownership programs and loans for people with disabilities – Fannie Mae, FHA loans, USDA housing loans, VA loans and the housing voucher program. People with disabilities are more likely to have trouble paying bills than people without – mortgages are no exception. These federal programs help make mortgages and home modifications more achievable.
See some auxiliary guides below and overviews of different homeownership programs that can apply to people with disabilities:
Fannie Mae is a government-run organization that offers affordable opportunities to home buyers, existing owners and renters – it’s also known as Federal National Mortgage Association (FNMA). You can secure a loan through a mortgage lender, you can’t get one directly from Fannie Mae.
- Have a credit score of 620 or higher
- Have a debt-to-income ratio no higher than 50%
- Be able to pay the down payment of 3 – 5%
- Show you have two or more months of mortgage payments saved
- Note: Purchasing a second home or investment property is permissible but down payments will be higher
- Loan maximum: $548,250 – $822,375 (as of 2021 for one unit depending on location)
- Great for: People with lower income
For those with a lower credit score or debt, an FHA loan could be a great option. The loans are backed and insured by the FHA. They are available with lower down payment options than most conventional loans.
- Have a credit score of 580 or higher and a low debt-to-income ratio
- Get the home appraised by an FHA-approved appraiser
- Complete a home inspection and report
- Occupy the property within 60 days of closing
- Note: You cannot get a loan for an investment property or second home
- Loan maximum: Dependent upon the area, starting around $330,000 (as of 2020)
- Great for: People with a poor credit history
Housing Choice Voucher (HCV) Homeownership Program
HUD’s homeownership vouchers can help pay for homeownership costs and mortgage payments. Families or individuals with disabilities do not need to meet the specific income and employment requirements that people without disabilities must meet.
- Be a first-time home buyer
- Attend and complete the Public Housing Agencies (PHA) counseling program
- Meet additional requirements depending on your situation – we recommend seeking guidance from a PHA counselor
- Great for: People who need mortgage assistance
USDA Home Loans
Two important USDA loans to know are the Single-Family Housing Guaranteed Loan Program and Single-Family Housing Repair Loans And Grants. The Housing Guaranteed Loan Program provides loans to low-income applicants to live in eligible rural communities. The Housing Repair Loans provide funds to improve, repair, modernize and remove health hazards from homes of those who have low incomes. Rocket Mortgage does not offer USDA loans.
USDA Single-Family Housing Direct Home Loans
- Provide proof that you don’t have access to safe, decent housing and you’re unable to secure a loan from other resources
- Agree to occupy the space as your primary residence
- Be a citizen or meet noncitizen requirements
- Be able to incur a loan’s obligations
- Loan maximum: Dependent upon the area and financial situation
- Great for: People who need a home and like a more laid-back lifestyle
USDA Single-Family Housing Repair Loans And Grants
- Be the homeowner and occupy the house
- Be unable to obtain affordable credit elsewhere
- Have a family income below 50% of the area median income
- For grants, be 62 years or older and not be able to repay a repair loan
- Loan maximum: $20,000
- Grant maximum: $7,500
- Total maximum: $27,500
- Great for: People who need to make home modifications
VA Loans: U.S. Department Of Veteran Affairs
If you’re a veteran with a disability there are a variety of programs and VA loans to help you buy or modify a house to fit your standards. Please visit the VA site for more specifics on the application process and what classifies as a qualified disability – see a summary below.
Specially Adapted Housing (SAH) Grant
- Own or will own the home, and
- Have a qualifying service-connected disability
- Loan maximum: $90,364 for FY 2020
- Great for: Veterans who need significant home modifications
Special Home Adaptation (SHA) Grant
- You or a family member own or will own the home, and
- You have a qualifying service-connected disability
- Loan maximum: $18,074 for FY 2020
- Great for: Veterans who need less extensive home modifications
Temporary Residence Adaptation (TRA) Grant
- Qualify for an SAH or SHA grant (see above), and
- Are living temporarily in a family member’s home that needs changes to meet your needs. (To use a TRA grant, you don't have to own the house.)
- Loan maximum: $39,669 (SAH-qualified applicants) or $7,083 (SHA-qualified applicants) FY 2020
- Great for: Veterans who need slight home modifications while staying in someone else’s home
Look Into Other Programs For Home Buyers With Disabilities
Aside from loans and grants, there are some organizations that build accessible and specifically adapted homes for people with disabilities. If you’re interested in additional assistance programs, check out these nonprofit organizations.
Habitat For Humanity
Habitat for Humanity is a global nonprofit organization with the goal to provide people with a decent place to live. Their description for being “in need of better housing” includes a home that’s unsafe, inaccessible, damaged, poorly made and unaffordable. Recipients of Habitat for Humanity homes must contribute to the creation of their home through “sweat equity.” This could be through working on the home and taking relevant classes, like personal finance or homeownership.
- Be in need of better housing
- Show a willingness to partner with Habitat
- Be able to pay an affordable mortgage
- Great for: People who need a home and are willing to get involved
Homes For Our Troops
The nonprofit organization Homes For Our Troops constructs and donates adapted homes to veterans who were injured while on duty after September 11, 2001. These homes made for veterans with disabilities are mortgage-free.
- Present a letter of eligibility from the VA
- You’re retired or in the act of retiring
- Pass a background check
- The home must be the primary residence and accept the responsibility of homeownership
- Have the resources to maintain a home, including upkeep, property taxes, home insurance, utilities, etc.
- Great for: Veterans who need an accessible, mortgage-free home
Rebuilding Together AmeriCorps
Rebuilding Together AmeriCorps has a vast number of local chapters that aim to rally communities and support each other through neighborhood rejuvenation and repairing homes. Different chapters have various availability and requirements so check out your local chapter for more information on how to get involved as a volunteer or recipient.
- Great for: People who need home repairs to create a safe environment
Additional Disability And Housing Resources
There are a ton of great organizations that share helpful resources and services, see some of them below:
- Habitat for Humanity: Home-building program for those who qualify
- Housing Choice Voucher (HCV) Homeownership Program: Provides vouchers to help people afford mortgage payments and other housing costs
- Fannie Mae: Affordable mortgage and other housing opportunities
- FHA Loans: Loans backed by HUD so you can get a better lender agreement
- National Center for Healthy Housing: Information and assistance for healthy and affordable housing
- National Low Income Housing Coalition: Education about affordable housing
- Rebuilding Together AmeriCorps: Home repairs and adaptations
- USDA Home Loans: Encompasses both the Single-Family Housing Guaranteed Loan Program and Single-Family Housing Repair Loans And Grants
- Accessibility and Home Safety Checklist: Baseline list of different home modifications.
- American Association of People with Disabilities: Variety of resources and initiatives
- Disability Benefits Help: Information on the SSDI and SSI processes
- National Organization on Disability: Employment resources
- National Disability Institute: Financial resilience and empowerment
- National Council on Disability: A round-up of resources
- Department of Veteran Affairs: Housing grants and additional resources for veterans
- Homes For Our Troops: Builds accessible homes for veterans with disabilities
- DAV: Resource round-up for veterans with disabilities
- The National Veterans Foundation: List of hotlines and resources
- USA.gov: Housing help and resources for veterans
Everyone deserves an accessible and safe home. Educate yourself on the home buying and mortgage processes, stay informed on your rights and look into available assistance through local nonprofits and federal programs. If you’re looking for further advice on mortgage and home loan options, talk to a home loan specialist – they can advise you on the best options for you, as well as any next steps you should take to help achieve your ideal space and home.
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