man sitting in front of houseCan I get Mortgage with Social Security Disability?

Just because someone is receiving Social Security disability benefits does not mean they should not want or have a nice home to live in. Similarly with people who are not receiving disability payments, the home's size, type, location and niceness is primarily dictated by what a person can afford in monthly payments, but simply receiving disability benefits does not prevent a person from obtaining a mortgage.

 

People who are receiving SSI payments may also purchase a home, but they must live in that home. Any other property would be considered an asset and if the person’s total assets are greater than $2,000 or $3,000 if they are married could be subject to losing their benefits.

Home Steps

The first step in purchasing a home, even before visiting with a realtor, is to see what you can afford. Quite frankly, if your only income is Social Security disability then the home you ultimately purchase will probably not be on the mansion side of things. You should shop around for the best mortgage rates with banks or mortgage brokers. In many instances a broker who represents a variety of companies may be able to find you the best terms.

Lender Rules

Because your income in part or whole comes from SSDI there are strict rules a lender must follow or they can be hit with pretty severe penalties and fines from the federal government. A lender is not allowed to ask you what your disability is or ask for proof of the physical disability. A lender cannot ever legally ask you medical-related questions and if they do you are not required to answer those questions. A lender also cannot request disability verification from your doctor.

If you request them to do so, a lender must use your disability benefits income as part of your income to show ability to repay the mortgage. They cannot exclude benefits income if you are likely to still be receiving the benefits for at least three more years from the application date.

Lender Needs

A lender will want two pieces of information upfront. The first is verification of your income which can be provided through one of the following tax documents, W2 forms (if income in addition to your disability benefits), a bank statement showing deposit of your benefits check, form SSA-1099/1042S which is your benefit statement or your Benefits Letter which can be downloaded from the SSA.gov website. In addition, the lender will need your last Notice of Award letter to show that you will receive benefits for at least three more additional years.

A lender also needs your credit score. Many lenders will provide a loan if your score is 575 or higher. The problem many people who receive SSDI have is that it can take up to three years for a person to begin receiving benefits after becoming disabled so they have a pile of debt or have been forced into bankruptcy destroying their credit score. If you are in this situation a visit to a good financial adviser will be extremely beneficial. If your score is too low today, you can work on your finances and could be in a very good position in a year or two.

Affordability

Lenders and realtors have one thing in common. Both are sales people and as such they desire for you to obtain a home that is at the top of your affordability level so that they can make more income. Don’t fall for great salesmanship and become straddled with a debt you regret for the next thirty years. Do your research and find a home that is within the budget YOU want.

Back Pay Benefit

Some people use their back pay lump sum award to purchase a home. The award can be upwards of $20,000 dollars making it an excellent down payment allowing the buyer to get a nicer home with lower monthly payments. In addition, purchasing a home at the beginning of your disability award makes it easier to prove that your disability will continue for at least three more years as the next review is either three or seven years away.

Programs

There are several programs designed to help people with disabilities purchase homes. HomePath homes require very low down payments, sometimes as low as only 3% (https://www.homepath.com). Fannie Mae’s Community HomeChoice can provide a loan based on your monthly benefit amount to people who qualify (http://www.fanniemae.com/portal/index.html) as well as down payments that could be as low as $500. Also, many people with disabilities already receive assistance from Section 8 to pay their rent. Check with your local Section 8 office to see if they also provide mortgage payment assistance. Military veterans should also check with the Veterans Administration for home ownership programs.

Not Second Rate

People who receive disability benefits are not second rate or second class citizens. Most already pay rent, and in many cases, the cost of rent is equal or even higher than a mortgage payment. Obtaining a house to call home is important for your health and psychological well-being. A home where you can truly relax and be yourself can aid in healing. It could be advantageous for you to look into becoming a home-owner.

 

 

 

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About the Cochran Firm Disability Lawyers
Recognized as one of the nation’s premier law firms, The Cochran Firm handles cases on behalf of clients seeking a Personal Injury Lawyer, Criminal Defense, Medical Malpractice, Bankruptcy Attorney in Atlanta or Social Security Disability Lawyer.The Firm can be reached at 1-800-THE-FIRM (1-800-843-3476) or fill out the form on this page. “Working for You.” Article by Benjamin A. Irwin, Esq.


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