Can Disabled People Easily Get Mortgage Loans? Know the Challenges!

Homeownership is one of the biggest dreams of Americans. However, people with disabilities might encounter specific obstacles in achieving this feat. Finding suitable housing that meets specific requirements can be challenging, and for people who are at or below the poverty line, Further, negotiating legal and financial restrictions can be particularly strenuous. However, people with disabilities can fulfill their homeownership dreams with the help of federal laws and resources that support equitable access to home loans and prevent discrimination. There are several government programs available for the disabled to assist them with the financial aspect of purchasing a home. Let’s start the discussion.

Purchasing a Home on Disability Income

It is possible to purchase a home using Social Security Disability Income (SSDI). This is a special type of income, which is given by the government to disabled individuals, who are under 65. But this option comes with some challenges. Meeting loan requirements is contingent upon the applicant's credit score. Periodic assessments will be conducted to confirm eligibility for SSDI income, making it impossible to predict the duration and continuation of these income benefits.

It is possible to purchase a home using Social Security Disability Income (SSDI). This is a special type of income, which is given by the government to disabled individuals, who are under 65. But this option comes with some challenges. Meeting loan requirements is contingent upon the applicant's credit score. Periodic assessments will be conducted to confirm eligibility for SSDI income, making it impossible to predict the duration and continuation of these income benefits.

Lending organizations might consider Supplemental Security Income (SSI) benefits as a possible source of income for people who are blind, disabled, and make little money, or who are over 65. However, there are certain requirements that must be dealt with, such as the strict income and asset restrictions for SSI recipients. In order to qualify for SSI, a person's assets cannot exceed $2,000 or $3,000 (if they are married). Even though not all assets are taken into account, those who receive SSI frequently struggle with money problems and might find it difficult to save for a down payment.

It is possible to include long-term disability benefits from an employer in a loan application, but it's important to remember that different lenders have different requirements. Depending on the nature of the income source, some lenders may reject the loan application. It can be helpful to thoroughly investigate your loan options before applying. But it's important to think about other possibilities and look for other lenders in case a lender rejects the application.

The lender requires appropriate documentation of the buyer's disability income if they are using disability benefits to buy a home. This usually includes submitting an employer's disability policy or statement along with pertinent SSI and SSDI documents, like an award letter from the Social Security Administration or a receipt.

Disability benefit recipients who need assistance navigating the home-buying process can speak with the financial or housing counselors.

Federal Laws and Protections for the Disabled

There are a few Federal laws that protect individuals with disabilities against discrimination during the home-buying process. Here’s a rundown:

• The Fair Housing Act (FHA)
  
  The Fair Housing Act prohibits discrimination based on disability in all aspects of the home-buying process, including advertising, sales, and financing. It requires that individuals with disabilities be provided with equal opportunities to purchase or rent a home. The Act also mandates that housing providers make appropriate modifications to their properties to accommodate and facilitate the needs of disabled individuals.


• The Americans with Disabilities Act (ADA)
  
  The ADA also favors the disabled buying a home by giving extra protections. It requires that businesses that are open to the public, such as real estate agencies and mortgage lenders, provide reasonable accommodations to individuals with disabilities, such as accessible facilities, auxiliary aids, and services.


• The Equal Credit Opportunity Act (ECOA)
  
  This law protects against discrimination so that the protected classes, including individuals with disabilities, do not have to encounter any sort of discrimination during the home loan process. You can get detailed information on mortgage discrimination through the Federal Trade Commission (FTC).


• Section 504 of the Rehabilitation Act of 1973
  
  This law guarantees that everyone has equal access to financial assistance from the U.S. Department of Housing and Urban Development (HUD). Furthermore, people with disabilities have the right to request reasonable accommodations during the home-buying process. Reasonable accommodations are changes or modifications to policies, practices, or procedures that enable individuals with disabilities to access housing opportunities. For instance, a person with a mobility impairment may request that a real estate agent provide virtual home tours or allow a trusted representative to physically inspect properties on their behalf. In the case of buying a home within a community that has a homeowners association, the law permits accommodations, to be made to the residence, such as installing a ramp at the entrance or making parking slots accessible.

• FHA Loans:
  
  These are loans insured by the Federal Housing Administration and are available to all individuals, including those with disabilities. Easy qualification and lower down payment requirements are the prominent features of these loans.


• VA Loans:
  
  Guaranteed by the Department of Veterans Affairs, VA loans are offered to eligible veterans, active-duty service members, and their spouses. VA loans do not have down payment requirements and can be opted for by people with disabilities.


• USDA Loans:
  
  The U.S. Department of Agriculture offers these loans to people who have the required income levels and are within the required location. You may be offered a low or no down payment option for these loans, depending on the circumstances. People with disabilities can easily apply for these loans.


• HUD Housing Choice Vouchers:
  
  First-time homebuyers who have finished the counseling program provided by Public Housing Agencies are eligible for HUD housing choice vouchers. These vouchers, also known as Section 8 vouchers, can assist with mortgage payments but are only accessible to those who meet the criteria or have qualified for HUD rental assistance. The voucher applications need to be submitted through the local Public Housing Agency. However, all agencies do not offer these, and even the ones that do have long waiting times.


• Fannie Mae:
  
  The majority of home loans in the nation are backed by Fannie Mae and Freddie Mac. Getting a loan through these organizations can be beneficial, especially for people whose pocket limits them to make a large down payment. The minimum downpayment requirement is 3% on the HomeReady Mortgage, which means you have to put down $4,500 on a $150,000 loan. And even this payment can be made through the available grants. Further, even a non-occupant can get the loan by vouching for the disabled through their own credit and financial track record. A perfect example could be a couple buying a home for their disabled child.

• National Center for Healthy Housing:
  
  The National Center for Healthy Housing is a nonprofit organization that works to make the home-buying process easier for people across the United States. It also recognizes people with disabilities and their need for particular assistance to create a safe and healthy living space. The organization offers resources and guidance to ensure the homes are welcoming and accessible to those with disabilities.


• Habitat for Humanity:
  
  The nonprofit organization attempts to create safe and affordable housing opportunities for families and individuals in need. It also focuses on providing housing to people with disabilities who may face different challenges. The organization relies on volunteer workers, donors, and community partners to build and repair homes for those who may not be able to afford a new house otherwise.


• AmeriCorps:
  
  It is an organization with different national service programs that provide services for the people of the US by providing disaster relief, education, and public health assistance.


• Homes for Our Troops:
  
  It constructs custom homes for retired or retiring veterans who were severely injured due to the 9/11 incident. The homes are mortgage-free and the purpose is to help people revamp their lives by providing assistance and required resources. The VA needs to give its consent with regard to a person’s eligibility and the individual needs to keep the home as a primary residence.


• National Low Income Housing Coalition:
  
  The organization attempts to ensure safe and affordable houses by advocating different policies and programs. It also works to create public awareness of the need for affordable housing.


• American Association of People with Disabilities:
  
  The American Association of People with Disabilities is a nonprofit organization that works to improve the lives of people with disabilities through advocacy, education, and public awareness. It promotes rights and fights against the exclusion of disabled from the society.


• A Home for Every Vet:
  
  A Home for Every Vet is a nonprofit organization that works to provide affordable housing for veterans in need through different programs and services, such as rental assistance, homebuyer education, and transitional housing.

• Check the Credit Score:
  
  Due to limited income sources, a large proportion of disabled people in America are below the poverty line. It may mean they have to take on debts to fulfill their daily needs. It is crucial to manage a good credit score if you want to apply for a mortgage loan. The lender would be willing to lend only if he deems the borrower as having the ability to repay.


• Budget:
  
  Create a budget to know what you can afford. Jot down all the monthly expenses and income sources as well as analyze whether you would be able to manage costs like utility bills, taxes, homeowner's association fees, maintenance costs, and insurance, along with mortgage payments.


• Get Pre-approved:
  
  A pre-approval letter for a mortgage tells the sellers that you are serious and lets you know how much you can spend. Provide your financial information, such as income and credit score, and the lender would analyze your eligibility to borrow.


• Choose the Right loan:
  
  Compare rates and closing costs to find the best loan for you. Look for government-supported and private programs and loans for disabled people. Think about the down payment, PMI, and other relevant costs associated with the mortgage.


• Find the Right home:
  
  Consider the size, location, and any special requirements you may have, such as accessibility or a certain type of neighborhood. Consider your type and extent of disability to figure out the house type you need. A real estate agent can help you narrow down your search based on your criteria.


• Get an inspection:
  
  A home inspection can help you avoid any hidden surprises and can prove to be a useful tool for negotiation. If the inspection reveals any problems, you may be able to negotiate with the seller to lower the price or have repairs made before closing the deal.


• Seek Help if Needed:
  
  HUD-sponsored housing counseling agencies offer guidance on homebuying, renting, and financial management. They can help with mortgage options, affordable housing, scam prevention, and financial management.