Difficult To Prove Your Income
Generally, when you apply for a mortgage, you must show to mortgage lenders that you have a stable income. However, those who depend on Social Security disability income usually dont have any documentation saying how long this income will continue. The Social Security Administration normally only provides proof that consumers are currently receiving benefits.
Unfortunately, some consumers have reported that loan officers have asked them for a specific description of their disabilities or a statement from a doctor to prove that their Social Security disability income is likely to continue.
Help For Those Who Need To Make Their Homes More Accessible
Once youve 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 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 grant to modify a relatives 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 to find out whats available. You can also contact your local HUD office for references
Investments That Dont Jeopardize Ssd Benefits
Someone who receives SSD benefits can invest in securities such as stocks, bonds, exchange-traded funds , and real estate investment trusts without jeopardizing their benefits. Dividend income from stocks, as well as other sources of passive income, is OK as far as the SSA is concerned because its unearned income. The key is whether the investment income is earned or not. Passive income is not earned in the legal meaning of SS law and not counted as evidence of an ability to work, says Gantt.
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Buying A House On Disability Benefits Or Ssi
Brittan Jenkins19 Jan 2018
By on 23 Mar 2018
The dollars and cents that go into moving vary greatly depending on a number of factors.
Know how to navigate the system so you can find the home youre looking for.
The complexities of Social Security Disability Insurance and Supplemental Security Income benefits leave many people wondering not only if they can buy a home, but if buying a home will, in turn, affect their benefits in the future. The short answer is many people who receive SSDI and SSI benefits can and do qualify to buy a home, but will also likely face some additional hurdles unique to receiving these benefits.
Ssd Benefits And Investment Income
Income can be earned or unearned. Earned income is money you make while actively working, either for an employer or yourself. It includes wages, salaries, tips, bonuses, net earnings from self-employment, contract work, certain royalties, and union strike benefits. This type of income counts against your monthly maximum for SSD eligibility.
Unearned income is money you make or receive through something other than employment or active work, and it doesnt count against the monthly income limits. Examples of unearned income include:
- SSD Benefits
Some of our clients who receive SS disability checks also have investment income from financial documents , rental property, or other passive income sources, says Gantt.
Keep in mind that if you have investment income, the SSA is likely to want a closer look. Current technology helps flag questionable investment income info, says Gantt. I tell my clients who move in investment arena to expect questions and review.
One way to prepare for questions is to use an affidavit. Financial investments are generally passive by nature. For true passive income earnings, we encourage SSD clients to be prepared to sign affidavits that they took no action on the investment income subject that could convert the income to the earned legal category, says Gantt.
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Learn About Social Security Disability
Social Security disability benefits are distributed through the Social Security Administration to qualified U.S. citizens. The program was designed to provide compensation as a safety net to working Americans that are, or became, disabled.
SSDI benefits are different from the Supplemental Security Income program, or SSI, for short. SSI provides benefits to disabled adults, as well as children, who come from low-income households. Social Security disability insurance, on the other hand, is intended for those who already paid into Social Security as part of their working wages. Learn more about if you qualify for these benefits in the sections outlined below.
Can You Buy A Home On Ssdi
Just like people receiving SSI, you will also meet challenges along the way when trying to buy a home.
But then, youre not going to have the same limitations or restrictions as those receiving SSI have. The main challenge is that neither the recipients nor the lenders cannot tell when the benefits are going to last. For this reason, it is hard for lenders to review and assess if the beneficiary has a stable income.
The Social Security Administration is only going to provide proof that the recipients are getting the benefit but they dont give guarantee of its future. The administration also does regular reviews for SSDI cases.
When youre thinking about buying a home on SSDI, you can find many programs and resources. There are also lenders for disabled people, who can use the loan for making improvements in their homes for their disabilities.
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What If I Have A Disability And I Am Not Receiving Any Disability Income
If youre disabled but do not receive SSDI or other long-term disability benefits, youll 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, youll 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 well cover in the next section, allow you to apply with a co-borrower, and their income can count toward your eligibility as well.
Disability Benefits For Veterans
You may be eligible for disability benefits if you’re on disability from your service in the Canadian Armed Forces or Merchant Navy.
You may get social assistance payments from:
- your province or territory
- your First Nation
These payments will depend on your household income, savings and investments.
You may also be eligible for health-related benefits from your province or territory. These benefits may include benefits that help cover the cost of:
- medical aids or devices
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Va Home Loans For Disabledveterans
The VA loan program, backed by the Department of VeteransAffairs, is one of the best home loans available. It does not require a downpayment and offers ultra-low mortgage rates. This makes it an attractive optionfor any veteran or service-member.
But there are additional VA loan benefits for veterans withservice-related medical problems or disabilities:
- VA disability income can be counted on your mortgage application
- You are exempt from paying the VA loan funding fee. Spouses of veterans whove died in the line of duty may also be exempt
- There are no minimum service requirements: If you have a service-connected disability, there is no minimum time to serve before youre eligible for a VA home loan
- You may be eligible for a property tax exemption and/or a mortgage tax credit to reduce your taxable income. Requirements vary by state, level of disability, and other factors. Check with your states tax authority for more information
Youll also need to meet the VAs standard lendingrequirements to qualify for one of these loans.
VA loan income requirements can be met by disability income.Technically, theres no minimum credit score to qualify for a VA loan however,many lenders require a FICO score of at least 580-620.
How Does Ssi Work
SSI serves as a stipend resource for people with limited income who have a physical disability, and are 65 or older. These benefits are paid out monthly at the current rate of $735 for an individual and $1,103 for a couple, as of January 2017.
With a limited monthly income, it can seem incredibly difficult to save for a home while also covering ongoing household needs. According to 2017 Zillow data, 68 percent of renters cited saving for a down payment as the biggest hurdle to buying a home.
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Challenges You May Face
Lenders require sufficient income and acceptable DTI ratios, regardless of age or social security benefits. Borrowers relying solely on social security income may have trouble qualifying for a high-enough loan amount, especially if they carry other recurring debts. A two-person household in which both borrowers draw social security also can have a problem of affordability down the road. For example, if one spouse dies, and the widow is entitled to only a percentage of the deceased spouse’s benefits, the remaining spouse may have trouble keeping up with payments. In general, however, a widow of retirement age — as determined by SSA guidelines — is entitled to 100-percent of the deceased spouse’s benefits.
The Right Loan Program Can Make Borrowing Possible
If youve 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 youve 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 theyre designed to get creditworthy borrowers into safe, affordable housing so they can live out their dream of homeownership and develop financial stability.
Know Your Credit Score And Improve It If Needed
Your credit plays a valuable role in your home loan options. Its 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.
Fannie Mae Loans Fordisabled Individuals
Fannie Mae is one of twomajor agencies that back most U.S. home loans .Mortgages backed by Fannie and Freddie are called conforming loans.
There is a wide variety of conforming loan products available, but the best Fannie Mae program for disabled home buyers is typically the HomeReady mortgage, thanks to its flexible guidelines.
To qualify, home buyersneed:
- Acredit score of 620 or higher
- Atleast 3% down payment
- Low- tomoderate-income
Long-term disability andSocial Security benefits are both acceptable income sources under the HomeReadyprogram.
In addition, you only need a3% down payment and it doesnt have to come out of your own savings.
Another benefit of FannieMaes HomeReady loan is that it allows non-occupant co-borrowers.
A non-occupant co-borrower is someone who does not live with you, but is included on your mortgage application.
You can use their credit or income to help you qualify for a loan if you dont meet the requirements on your own. For example, a parent or sibling with strong credit and high income could be included on their disabled family members mortgage.
Finally, this program allowsyou to count additional household income on your application. Home buyers withlow income could increase their borrowing power by adding income from rentersor roommates.
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Grossing Up Nontaxable Income For Easier Qualification
In addition to count social security disability income for mortgage qualification, a higher amount may be used. Because disability income is nontaxable, lenders are allowed to increase the income to compare more equally to gross monthly incomes. Allowed grossing up limits are based on the loan program. Grossing up limitsper home loan programs are
- FHA 15%
- VA Loans 25%
Grants For People On Social Security Disability
Social Security Disability Insurance benefits are awarded to people with impairments that prevent them from working. While there are few specific grant programs for people on Social Security disability, there are many government and private grants for people with disabilities. if a person qualifies for Social Security Disability, he will likely be eligible for most general grant programs.
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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 .
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.
Lenders should not request information about the nature of your disability, according to the Consumer Financial Protection Bureau .
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.
Its 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 . This income, when properly documented, can also be used to qualify for a mortgage.
How To Apply For The Disability Tax Credit Certificate
- To obtain a DTC, you must fill out the first section of the T2201 tax form. The form is available both online and from CRA offices across Canada.
- Your medical doctor or other qualified professionals will need to verify and certify your condition on the DTC application.
- The Disability Amount can also be transferred to family members and spouses if the impaired person is dependent on them for basic needs, such as food, shelter and clothing.
Once approved by CRA, the DTC allows you to claim the Disability Amount on your tax return.
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Programs For Home Modification
If you already own your own home, you can apply for grants and loans from the USDA to make accessibility improvements through the Single Family Housing Repair Loans & Grants program. This program, which also goes by the name of Section 504 Home Repair program, provides loans of up to $20,000 to very low-income homeowners to improve their home. In addition, the program provides grants of up to $7,500 to elder very low-income homeowners to make health and safety improvements to their homes.
To qualify for the program, you must:
- Own your own home and use it as your primary residence
- Lack access to affordable credit elsewhere
- Have a family income below 50 percent of your area median income
- For grants, be at least 62 years old and lack the resources to repay a repair loan
Applications are accepted year-round through your local USDA office.
Ssdi And Property Ownership
Typically, the SSI system restricts people in how much property they can own. So, while SSI beneficiaries can own a primary residence and the land it stands on, additional property may jeopardize their ability to access full SSI benefits. And if their countable resources exceed a specified amount, they will end up progressively losing those benefits until they disappear altogether.
However, SSDI and property ownership rules are a bit more relaxed. Asset limits usually dont apply. So, you can buy and own property even if you dont intend to use it as your primary residence. What you paid into the SSDI system and whether you meet the definition of disability is what matters.
Therefore, it is possible to inherit or own rentals or other cash-generating properties, earn an income from them and continue to receive your SSDI benefits. Thats because Social Security sets a limit on earned income as part of your eligibility criteria. And usually, property-related income tends to be passive and, thus, falls under unearned income.
You can also own investments, such as stocks, annuities and mutual funds, for similar reasons.
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