Buying a home can present unique obstacles for people with disabilities. It’s essential to find a home that meets the physical or mental needs of the individual, but people with disabilities may also struggle to meet financial qualification requirements. While the average poverty rate for all Americans was 11.5%, it landed at 24% for disabled Americans, according to the Center for American Progress’s data on poverty in the United States.
People with disabilities don’t have to face the homebuying process alone. Several loan programs and grants are designed to help people with disabilities achieve their dreams of homeownership.
Here’s everything you need to know about buying a house as a person with a disability.
Can You Buy a House on Disability Income?
Yes, you can buy a house on disability income. Lenders will consider disability income as long as it qualifies as stable and likely to continue.
Qualifying types of disability income include Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and any long-term disability income from an employer or insurer.
If you’re temporarily on disability benefits, you can still use it as qualifying income as long as you can demonstrate another reliable income source that will continue once the disability benefits end.
There are a few general requirements to use disability income for a home loan:
- Just like any other source of income, you need enough to support your monthly mortgage payments. While it varies by loan type, most lenders want to see a debt-to-income (DTI) ratio below 43% to qualify.
- You’ll need to prove that the income will continue for at least three years. If you’re expecting to transition from disability income to another source, the lender will consider the lesser of the two incomes on your application.
- The lender will need to see proof of income. For SSI or SSDI, you must provide a Social Security award letter or a benefit verification letter. When the applicant differs from the person receiving the benefits, both documents must be provided.
- If your income comes from an employer or insurer, you’ll need to provide a disability policy or a statement from the employer or insurer describing the terms of the disability income.
Once you’ve gathered the necessary documents, you’re ready to start exploring the loan programs available.
Home Loan Programs for People with Disabilities
Several loan programs offer benefits or assistance that can appeal to people with disabilities, especially if you struggle to meet the qualifications for traditional financing.
Fannie Mae HomeReady
The Fannie Mae HomeReady program is an excellent option for people with disabilities who don’t have much saved for a down payment. HomeReady allows for down payments as low as 3% and requires a minimum credit score of 620.
HomeReady considers non-traditional sources of income, which can benefit those who receive disability benefits or have alternative forms of income. Some applicants may also qualify for a $2,500 credit toward their down payment and closing costs.
Refi.com requires a minimum 620 credit score for conventional loans, which aligns with HomeReady’s baseline requirement.
Freddie Mac Home Possible
The Freddie Mac Home Possible program is similar to HomeReady, but with a few key differences. While HomeReady is best for those with limited savings, Home Possible has more options for applicants with little to no credit history.
A credit score of 660 or above qualifies for a 3% down payment under Home Possible. If you have little or no credit history, you may still qualify with a 5% down payment. Borrowers can also cover closing costs through various sources, including grants.
Keep in mind that individual lenders may apply their own minimums. Refi.com requires a minimum 620 credit score for conventional loans.
VA Home Loans for Disabled Veterans
VA mortgages can be especially beneficial for Veterans who have incurred disabilities during or as a result of their service. VA mortgages require no down payment, offer competitive interest rates, and have more lenient credit requirements than many other loan types.
Regardless of disability rating, Veterans are exempt from the VA loan funding fee and can count disability income toward their qualifying income. VA loans may also include funding for accessibility modifications, ensuring the home can be adapted to the Veteran’s needs.
While the VA does not set a minimum credit score, individual lenders do. Most require at least a 620 credit score for VA loans.
FHA Home Loans
FHA loans typically require down payments as low as 3.5% and have more lenient credit requirements than conventional mortgages. FHA loans also permit the use of gifts or grants for down payments and allow for accessibility modifications to be included in the loan amount.
The FHA’s minimum credit score is 500, though most lenders — including Refi.com — require a minimum of 620 due to lender overlays.
Home Loan Grants and Other Resources for People with Disabilities
Beyond loan programs, government agencies, nonprofit organizations, and local initiatives offer a range of grants and resources to help people with disabilities purchase a home.
Habitat for Humanity
Habitat for Humanity is a nonprofit that builds and renovates homes in partnership with low-income families and people with disabilities. Habitat homes are designed to be accessible and tailored to each homeowner’s needs, incorporating features like ramps, wider doorways, and other accessibility modifications.
Habitat for Humanity also provides affordable mortgage options, often with zero-interest loans, making homeownership more financially accessible for individuals with disabilities.
Rebuilding Together AmeriCorps
This partnership brings professionals together to provide critical home repairs and accessibility modifications for homeowners with disabilities. The program helps alleviate the financial burdens that often accompany homeownership for people with disabilities.
Homes for Our Troops
Homes for Our Troops builds specially adapted, mortgage-free custom homes for severely injured post-9/11 Veterans. These homes are fully accessible and equipped with advanced technology to enhance independence and mobility.
Housing and Urban Development (HUD) Housing Choice Vouchers
While traditionally known for rental assistance, the Housing Choice Vouchers program can also provide eligible participants with funds to buy a home and ongoing monthly assistance with homeownership expenses. Through its Family Self-Sufficiency (FSS) program, participants can also access financial education, employment training, and other services designed to build long-term financial stability.
National Disability Institute
The National Disability Institute offers resources on budgeting, credit management, and homebuyer education. They also collaborate with financial institutions and policymakers to create more inclusive financial products, working to ensure that people with disabilities have equal access to housing opportunities.
Fair Housing Laws for People with Disabilities
Fair housing laws in the United States provide crucial protections for people with disabilities, ensuring equal access to housing opportunities. Key federal laws include:
Fair Housing Act
The Fair Housing Act is a federal law that prohibits discrimination based on disability — among other characteristics — in the sale, rental, and financing of housing. It requires landlords and housing providers to make reasonable accommodations and modifications for individuals with disabilities, such as allowing service animals or making accessibility changes to rental units.
Section 504 of the Rehabilitation Act of 1973
Section 504 prohibits discrimination based on disability in programs and activities receiving federal financial assistance — including housing programs and entities that receive federal funding, such as FHA and VA loan programs.
Americans with Disabilities Act (ADA)
While primarily focused on public accommodations, the ADA also has implications for housing. It requires certain types of housing — such as multifamily units built after 1991 — to meet accessibility standards, including accessible common areas and units. It also prohibits housing discrimination by public entities.
Individual State and Local Laws
Many states and local municipalities have their own fair housing laws that may provide additional protections beyond federal requirements. Some states, for example, have stricter accessibility standards for housing.
HUD Regulations
HUD has implemented regulations to enforce fair housing laws, including specific guidelines for reasonable accommodations, accessibility modifications, and standards for new construction and renovations.
Collectively, these laws work to eliminate housing discrimination, promote accessible housing, and ensure equal opportunity for all. Individuals who believe their fair housing rights have been violated can file complaints with HUD or their state’s fair housing enforcement agency.
Already a homeowner and looking to lower your rate or access your equity? Start your refinance application at Refi.com — our team can help you find better terms on your existing mortgage.
