Homeownership may seem out of reach for many Americans, but those with a disability shouldn’t count themselves out. The homebuying process should be accessible for everyone, and some laws and programs can help you attain homeownership if you have a disability. We’ve gathered resources and support for navigating the homebuying process, including obtaining a mortgage and what you need to know before purchasing a home.
Know Your Rights as a Homebuyer
The federal government protects people with disabilities, whether they rent or own and reside in public or private housing. The Fair Housing Act prohibits discrimination against people with disabilities in home transactions. Section 504 of the Rehabilitation Act prohibits discrimination against those with disabilities who are applying for financial assistance, such as through a mortgage loan. Furthermore, under the Fair Housing Act, buildings constructed after March 13, 1991 must have accessible entrances and common areas, among other accessible features.
Americans With Disabilities Act (ADA)
The ADA was passed in 1990 to give people with disabilities equal opportunity to those without disabilities. The law extends to public places, including schools, workplaces, transportation services and private locations open to the public, such as restaurants and hotels. And in 2009, the Americans with Disabilities Act Amendments Act (ADAAA) adjusted the meaning of “disability.” People with disabilities have equal employment rights and rights to state and federal government services.
The Fair Housing Act
The Fair Housing Act prohibits discrimination in housing matters based on race, sex and disability, among other protected categories.
The Fair Housing Act provides legal protection against discrimination based on race, sex, religion, national origin, familial status and disability. The law applies whether renting, selling, or owning housing property. Under the Act, people with disabilities have the right to make accommodations to their place of residence for accessibility. The U.S. Department of Housing and Urban Development (HUD) offers information on housing discrimination under the Fair Housing Act.
Section 504 of the Rehabilitation Act of 1973
Section 504 of the Rehabilitation Act of 1973 prohibits organizations that receive federal assistance from denying services to people with disabilities. People with disabilities are given equal rights to access to benefits and services, such as through a mental health center or nursing home. This means people with disabilities have equal opportunity to receive federal services.
Equal Credit Opportunity Act (ECOA)
Under ECOA, lenders must provide an explanation if they deny an applicant credit. It also extends protection based on other classes, such as race, sex and marital status, among others. The law was enacted in 1974.
Can You Buy a Home on Disability Income?
If you receive assistance in the form of disability income, such as Social Security Disability Insurance (SSDI) or Supplemental Security Insurance (SSI), you can use it to qualify for a mortgage. This income counts toward your total monthly income for the purposes of securing a mortgage. If you do receive SSI, however, keep in mind there are asset limits: $2,000 for a single person and $3,000 for a married couple. This could make it difficult, if not impossible, to save up for a down payment. And while lenders cannot refuse you a loan because you receive disability income, they can turn you down if you don’t meet minimum income and credit and debt requirements.
Eligible Income Sources for a Mortgage
SSDI and SSI are acceptable income sources for a mortgage. If your application is denied, you can request an explanation from the lender. You can also try to apply again with a different lender.
Long-Term Disability Income
This type of income provides disability income over a long period versus temporary disability. Typically, long-term disability is paid until the collector reaches retirement age. This type of income is considered an acceptable source of income for home loans.
Supplemental Security Income (SSI)
This form of disability income is intended to help cover basic costs for people with disabilities. While SSI is accepted in most home loan programs, the amounts tend to be less than SSDI. If SSI is your sole source of income, it can be difficult getting a loan based on income requirements.
5 Tips for Buying a House on Disability
Though many are facing housing insecurity, buying a house using disability income should be as straightforward as purchasing a property using other approved income sources. You’ll need to ensure your credit score meets the minimum requirements for the mortgage program you’re applying to and prepare a down payment in cash. You’ll also want to shop around with different lenders and check what interest rates they offer.
Tighten up your credit score
If you have any derogatory marks or outstanding debts attached to your credit report, you’ll want to take steps to clear these before applying for a mortgage. Certain items on a credit report can prevent you from being accepted for conventional loans. Generally, having a higher credit score will garner a lower interest rate, saving you money over the long term.
Prepare your down payment
Know your budget and make sure you have the amount needed for a down payment. Typically, this ranges from 5% to 20%, though some lenders may accept as little as 3% down.
Not all lenders offer the same interest rates. You’ll also want to find one that streamlines the process as much as possible, so performing research via the internet or word-of-mouth reviews can help you find a lender that will be best to work with.
Calculate your debt-to-income ratio
When you apply for a mortgage, your lender will look at your debt-to-income ratio to calculate how much of a loan you can afford. It can be helpful to know this information in advance to help you decide your budget for homebuying.
Apply with your lender of choice
The next step is to prequalify for a mortgage with your chosen lender. Many lenders offer an online application, while with others, you may go in person to apply.
How to Qualify for a Mortgage
Obtaining a mortgage should not be a problem if you receive disability income, as laws prevent lenders from discriminating against people with disabilities, and disability income is an accepted source of income. However, keep in mind that you can be denied a mortgage if your total income doesn’t meet the lender’s requirements. It can be a good idea to hire a mortgage advisor to help go over the different mortgage programs and types of loans, such as FHA and conventional, to see which is best for you.
How to Qualify for a Mortgage
Knowing your debt-to-income ratio and boosting your credit score before applying for a mortgage can be helpful first steps in your journey to buying a home. Having all your documentation before you prequalify is important to make the process as easy as possible.
Know your credit score
Checking your credit score in advance and calculating your debt-to-income ratio can give you a heads-up about your financial picture before your lender checks them.
Estimate how much you can borrow
By knowing your debt-to-income ratio and how much you have saved for a down payment, you can estimate how much you can borrow.
Know how much home you can afford
Many affordability calculators can break down your mortgage payments, including taxes and insurance, at any home price.
Be prepared for lender questions
You’ll need to answer questions about any inquiries, marks on your credit report or late payments that have been reported to the credit bureaus. You’ll also need to answer questions about your income and any employment.
Protecting Yourself From Mortgage Discrimination
Knowing your rights and the laws to prohibit discrimination can help you feel more confident in the mortgage process. These laws are important to know so that you can be aware of any red flags the lender raises, if they come up, and any questions they may ask that would be unlawful.
Keep these best practices in mind while working with your lender to ensure the process is fair and within the law. If you experience discrimination, you can take steps to address it.
- Keep your income verification handy: Lenders will look at your Social Security benefit letter or other documentation to verify your income. However, they are not permitted to ask any questions about the nature of your disability or whether these benefits are likely to continue.
- If you are denied a mortgage, know your rights: Lenders must provide a written explanation for denial of credit. If you believe you have faced discrimination, keeping records of the application process is essential, so you have written documentation you can provide.
- Submit a complaint: If you believe you have been discriminated against in the mortgage process, you can submit a complaint with the Consumer Financial Protection Bureau online or by calling (855) 411-2372.
Do You Need to Hire a Housing Counselor?
Housing counselors and mortgage advisors can certainly help you navigate the mortgage and homebuying process. If you do decide to hire a housing counselor, it can be a good idea to make sure your counselor is approved by the U.S. Department of Housing and Urban Development (HUD). HUD offers online resources for locating a housing advisor. A housing counselor can take a look at your financial picture and offer advice for finding the best mortgage for you. Be sure to have a list of questions to review with your housing advisor to maximize their services.
Contact Your Local Organization
Federal and state governments offer help and resources for people with disabilities to find a home, as well as make accessibility improvements to an existing home. Contacting your local government via a municipal website email address or phone number can be a good start to finding hyperlocal resources. And be sure to check your state’s government page for disability resources. For example, the state of New Jersey offers housing resources for people with disabilities.
Homeowner Financial Assistance and Support Programs
While people with disabilities applying for conventional and FHA loans may need to meet income thresholds, programs are available that help people with disabilities obtain a home loan without these stringent requirements. There are also special VA home loans for veterans who are disabled.
Disability Home Loan Programs
There are home loan programs for people with disabilities and general home loan programs for people with limited income. These programs can help make it easier to get a mortgage, and one that works with your financial situation. Requirements for these programs differ from conventional and FHA loans, and varying maximum loan amounts are provided as well.
There are conventional loans that people with disabilities or on low-income can use. They offer lower down payment requirements and lessened restrictions to allow greater flexibility.
- Freddie Mac Home Possible is a conventional loan that allows for a down payment of as little as 3%. Co-borrowers who don’t reside in the home are also able to be on the loan, and borrowers can own other property without being disqualified for the loan.
- Fannie Mae HomeReady allows for a lower down payment and increased credit flexibility for borrowers. Borrowers are required to take a course on homeownership education to qualify.
Housing Choice Voucher (HCV)
HCV offers help with homeownership costs and mortgage payments. There are no specific income or employment requirements, making it a good choice for people with disabilities who may be on limited income. Contact your local Public Housing Authority regarding eligibility to see if you meet the income and family size requirements to apply.
Government Assistance Programs
Both the federal and state governments offer assistance in various forms. Resources are available to make the homebuying process more manageable, including tax-free savings accounts for people with disabilities, assistance regarding saving for a down payment and housing advice from the U.S. Department of Housing and Urban Development.
US Department of Housing and Urban DevelopmentThe Office of Fair Housing and Equal Opportunity of HUD offers guidance on its website about Fair Housing laws and allows you to file a complaint if you have faced discrimination. It also posts news updates about issues regarding homeownership for people with disabilities and can connect you with a HUD-approved housing counselor if desired.
There are no requirements for working with HUD aside from having a disability.
US Department of Agriculture
The U.S. Department of Agriculture (USDA) offers loans for individuals who are elderly, disabled, low-income or Americans living in rural locations. USDA loans do not require a down payment like other loan types. A few different types of USDA home loans allow for modification to a home or a mortgage for a new home. Keep in mind there is a list of requirements to be eligible for a USDA loan.
There are three types of USDA housing loans: Single-Family Housing Direct Home Loans, Section 502 Guaranteed Rural Housing Loan and Section 504 Home Repair Program. The first two loans help low-income borrowers get mortgages for terms ranging from 30 to 38 years fixed. The home repair loan allows financing for home repairs and improvements.
Requirements for a USDA loan include income requirements, and an applicant must be without a safe, sanitary place to live. You must meet citizenship requirements and plan to occupy the property as your primary residence. There are also property requirements, including that it must be 2,000 square feet or less and in a rural area with a population under 35,000.
There are income requirements for all three USDA loans, and applicants must not be able to get a mortgage with another lender. There are also property requirements, such as limiting to those 2,000 square feet or less, there can be no in-ground swimming pool and the property can’t be used to earn income.
Bank Statement Loans
As a self-employed homeowner with a disability, Aunia Kahn used a bank statement loan to mortgage her home. “It gave me a unique opportunity to be able to own a house,” Kahn says.
A bank statement loan can be a solid option if you are self-employed. Approved applicants are able to borrow up to $1,000,000 or more, depending on the bank — much more than with other loan types — without providing the typical employment documentation for conventional mortgages.
There are risks associated with a bank statement loan. “One thing I would like to say about bank statement loans is there are a lot of people out there trying to scam business owners and people that can't get conventional loans,” Kahn cautions. “The loan company I went with is one of the biggest and long-standing bank statement loan companies. They were able to get me a very reasonable mortgage. It is amazing to be able to own my home.”
Instead of looking at your recent pay stubs for employment and income verification, lenders will look at your bank statements over the past 12 months to approve or deny your application. You typically need a 20% down payment and a low debt-to-income ratio. There are also time requirements for how long you’ve been self-employed.
FHA loans can be a great option if your credit score doesn’t meet the requirements for a conventional loan. FHA loans can be attractive because they allow for a lower down payment than other loan types. If you are unable to save for a larger down payment or have derogatory marks on your credit report, an FHA loan could be a good fit.
FHA loans typically require a credit score of at least 580. Lenders will also look at your debt-to-income ratio to ensure it’s not too high. You’ll need to use an appraiser that the FHA approves, and the maximum amount you can borrow is lower than with a conventional loan.
Home Modification Programs
Other than financing the purchase of a new home, renovation and home modification loans are available to fund improvements. An Access Loan from Digital Federal Credit Union (DCU) allows for $1,000 to $25,000 for people with disabilities to make improvements for greater mobility within a home. FHA renovation loans are also available, including Fannie Mae HomeStyle Renovation and a 203(k) loan.
For an Access Loan, the borrower doesn’t need to be the property owner, but you need to be a member of DCU. Fannie Mae HomeStyle has time limits for when the work is completed, and you must use an approved contractor. There are also down payment requirements. 203(k) loans, on the other hand, are relatively flexible. They can be used to finance the purchase and renovation of a property, though there are requirements for the property and appraisal and inspections.
Down Payment Assistance and Grants
Down payment assistance loans and grants are available, typically to first-time home buyers. Searching for and applying for grants and assistance can be helpful ways to help fund your down payment.
- HUD Good Neighbor Next Door Grant: This grant is available to law enforcement officers, K-12 teachers, firefighters and EMTs. It provides 50% off the sale of a home, with the agreement that the recipient will live in the home as their primary residence for at least 36 months. You can check listings in your area on HUD’s website.
- Chenoa Fund: The Chenoa Fund, by CBC Mortgage Agency, offers down payment assistance for people with low-to-moderate income. It offers 3.5% to 5% for a down payment that does not need to be repaid.
- Bank of America Down Payment Grant Program: Bank of America offers assistance in the form of credit up to $7,500 to go toward closing costs and a down payment grant of 3%, or up to $10,000. Since it is a grant and not a loan, it does not have to be repaid.
Housing Help for Veterans With Disabilities
Veterans Benefits Administration also offers assistance and loans exclusively to veterans. The Specially Adapted Housing (SAH) grant and Special Housing Adaptation (SHA) Grant provide funds to veterans with disabilities stemming from their service.
Specially Adapted Housing (SAH)
The SAH grant can be used to construct a new home or modify an existing home. The purpose of the grant is to allow veterans to have a home that allows them mobility and ease of use.
You must have specific disabilities related to your service, including loss or loss of use of one or both legs or a severe burn injury.
Varies per year, but currently at $101,754.
Veterans purchasing a new home or undergoing major renovations.
Special Housing Adaptation (SHA)
The SHA grant is typically used to modify an existing home to make it more accessible. The grant amount maximum is relatively lower than for a SAH grant.
You must have specific disabilities related to your service, including loss or loss of use of both hands or arms below the elbow or severe burn injury.
Varies per year, but currently at $20,387.
Veterans who already own a home but would like to make minor improvements.
Nonprofit Programs Helping Homebuyers With a Disability
Aside from government assistance, some nonprofits help people with disabilities own a home. Some nonprofit programs have initiatives to include people with disabilities, and others' sole mission is to provide housing for people with disabilities and severe injuries.
Habitat for Humanity
Habitat for Humanity acknowledges that purchasing a home can be difficult for people with disabilities, and partners with other agencies to help further its initiative to help provide housing. Its different global divisions construct and renovate homes for people with disabilities and earn a low-income.
Habitat for Humanity asks that eligible homebuyers be in need of adequate housing and help build their home. They also must be able to pay for a mortgage.
Homes for Our Troops
Homes for Our Troops helps build and adapt custom homes for recent veterans with severe injuries. Veterans can choose where they want to live, and the organization stays in touch after the home is constructed and donated to help meet any needs that arise.
The program helps post-9/11 veterans with severe injuries, including traumatic brain injury, paralysis and limb amputations. Applicants must pass a criminal and credit background check, be retired from military service and receive a letter of eligibility from the VA SAH grant program.
Rebuilding Together AmeriCorps
Rebuilding Together AmeriCorps is an organization that helps repair and rebuild homes. It focuses on providing a safe home for the recipients of its programs. It performs repairs as well as energy efficiency upgrades.
Rebuilding Together AmeriCorps helps people with disabilities, veterans, the elderly and families with low-income. Household income must be at or below 80% of the median income in the area.
Expert Insight on Homeownership Programs for People With Disabilities
MoneyGeek spoke with mortgage and housing professionals to provide expert advice on navigating the homebuying process as a person with a disability. They recommend specific programs and strategies to streamline the process.
- What are some helpful programs for people with disabilities who are purchasing a home?
- Are there any special considerations to know when using disability income to purchase a home?
Founder and CEO at Mortgage Relief
Owner of Simple Homebuyers
Founder & Operating Manager of Tiffany Property Investments, LLC
Resources to Help With Homebuying & Navigating Discrimination
Whether you are beginning the homebuying process or have faced discrimination and need assistance, there are resources available to help you. Review the different links to find resources and application forms that you may need.
- Fair Housing Accessibility Guidelines: Learn about the guidelines for accessible housing and important contact information.
- Information for People With Disabilities: HUD offers information on the different laws in place to protect people with disabilities from discrimination and helpful links.
- National Affordable Housing Act: Review the Affordable Housing Act for information on support for housing.
- Apply for Social Security Benefits: This link allows you to apply for both SSI and SSDI.
- Find Your Local Public Housing Authority: For assistance with applying for a Housing Choice Voucher, find and contact your local public housing authority.
About Cheryl Wagemann
- Disability Rights of California. "Fact Sheet: Disability-Based Housing Discrimination." Accessed June 6, 2022.
- The Mortgage Reports. "Grants and home loans for disabled home buyers in 2022." Accessed June 6, 2022.
- Connecticut Housing Finance Authority. "Home of Your Own Program." Accessed June 6, 2022.
- Brandeis University. "Housing Problems for Disabled People." Accessed June 6, 2022.
- Disability and Health Journal. "The relationship between unmet need for home and community-based services and health and community living outcomes." Accessed June 6, 2022.
- U.S. Department of Housing and Urban Development. "Disability." Accessed June 6, 2022.
- State of New Jersey Department of Community Affairs. "Federal Fair Housing Act." Accessed June 6, 2022.
- U.S. Department of Housing and Urban Development. "Housing Discrimination Under the Fair Housing Act." Accessed June 6, 2022.
- Federal Trade Commission. "Equal Credit Opportunity Act." Accessed June 8, 2022.
- Consumer Financial Protection Bureau. "CFPB Provides Guidance to Help Lenders Avoid Discrimination Against Consumers Receiving Disability Income." Accessed June 8, 2022.