Can I Use Disability Income To Qualify For A Mortgage

Guide To Mortgages And Home Loan Help For The Disabled

This guide has been created to help individuals living with disabilities, and their family members, in the process of buying a home of their own. Here you can learn more about the five important steps in buying a home and about financial assistance programs that are available for you living with disabilities, who want to buy a home.

After reading this guide to home ownership for people living with disabilities, you will know more about:

• The advantages and disadvantages of buying a home
• The most important steps in the home-buying process
• Common terms related to home-buying
• How to get started in your quest to purchase a home
• Financial assistance geared toward enabling you living with disabilities to buy your own homes

Are You A First

Unless you are a person with a disability or you are helping a related person with a disability to buy or build a qualifying home, you have to be a first-time home buyer to withdraw funds from your RRSP to buy or build a qualifying home.

You are considered a first-time home buyer if, in the four-year period, you did not occupy a home that you or your current spouse or common-law partner owned.

Usda Home Loans For Disabled Persons

The USDA loan program backed by the U.S. Department of Agriculture is another zerodown mortgage that allows qualified borrowers to buy a home with disability income.

USDA loan requirements typically include:

• Income is no higher than 15% above your areas median income
• The home youre buying must be in a USDAapproved rural area

Disabled home buyers with income below the lowincome limit for their area may be eligible for a USDA Single Family Housing Direct Loan.

The SingleFamily Housing Direct Loan is a subsidized mortgage program, meaning USDA will help cover a portion of the homeowners mortgage payments for a set period of time. Program eligibility and the amount of payment assistance depends on the applicants household income.

Another big benefit of this mortgage program is that fixed interest rates can be as low as 1%.

USDA subsidized home loans are available to borrowers including disabled borrowers who:

• Do not have safe, decent, or sanitary housing
• Are unable to get an affordable mortgage
• Meet citizen or eligible noncitizen requirements
• Are not barred from federal loan programs
• Have qualifying low income for their area

In addition, the home being purchased must meet the following guidelines:

• Square footage usually cant exceed 2,000
• Price cant exceed area loan limit for 100% loans
• No inground swimming pool
• Must be a primary residence, and cannot generate income

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Contact A Housing Counselor

Start by locating a housing counselor in your area. The link below will take you to a search engine that lists all HUD approved Housing Counselor in your state. The housing counselor plays a very important role in the process of finding and ultimately buying a home. And HUD approved housing counselors will additionally help you for free or at little cost. The housing counselor is certified and educated in assisting clients in the home-buying process with special needs.

A housing counselor will:

• Explain your local housing options
• Research available financial assistance programs
• Help you reach a housing solution based on your current financial and practical situation

Find a HUD approved Housing Counselor near you! Housing counselors approved by HUD, the Department of Housing and Urban Development, usually costs very little or nothing at all, receiving commission from HUD.

How To Qualify For A Mortgage With Disability Benefits

You may want to get your own place or perhaps a better home after you start receiving disability benefits but have concerns about whether that is possible. The good news is that you can qualify for a mortgagewith disability benefits. To start, you will need a copy of your award letter and bank statements that show your direct deposits to demonstrate that you have a stable income.

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Can I Get A Mortgage If Im On Benefits

Yes, there are mortgage lenders who are happy to consider applications if you are on state benefits. However, there are also providers that will not consider benefits as a form of income, only take into account a percentage of this income or only take these benefits into account if you are employed or retired.

With any mortgage application, the lender is primarily concerned that you can afford the repayments. All applicants disabled or not must pass strict affordability checks. Affordability checks are designed to assess your ability to continue repaying your mortgage if circumstances were to change, such as interest rates rising. To find out more about these, take a look at our How much can I borrow for a mortgage guide.

If you can pass these affordability tests, then there should be no problem with you obtaining a mortgage. However, you may have to shop around to find a lender who will consider a mortgage if your sole income is benefits-based. Here, its a good idea to use the services of a mortgage broker these professionals know the mortgage marketplace and will know what lenders are open to applications from people on benefits. This can help you avoid wasting your time applying to mortgage lenders who arent suitable.

Fannie Mae Loans For Disabled Individuals

Fannie Mae is one of two major 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 buyers need:

• A credit score of 620 or higher
• At least 3% down payment
• Low to moderateincome

Longterm disability and Social Security benefits are both acceptable income sources under the HomeReady program.

In addition, you only need a 3% down payment and it doesnt have to come out of your own savings.

The HomeReady program allows you to cover the entire down payment using grants, down payment assistance funds, or money gifted from a family member or caretaker.

Another benefit of Fannie Maes HomeReady loan is that it allows nonoccupant coborrowers.

A nonoccupant coborrower is someone who does not live with you, but is included on your mortgage application.

You can use their credit history 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, HomeReady allows you to count additional household income on your application. Home buyers with low income could increase their borrowing power by adding income from renters or roommates.

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Maternity And Paternity Leave

Providing you write to your lender, confirming that you will return to work on a particular date, youll typically be fine. Your normal employment income will usually continue to apply, even if youre on a reduced salary or will be unpaid at closing.

However, youll need a pile of paperwork, including correspondence from your employer confirming your returntowork date.

Re: Can I Use Disability As Income For Mortgage

I used my original VA Award letter that I’ve had in my safe forever. I know you can call the VA though and request a letter stating you receive VA Disability . I had to get a letter from them one time to get my DV license plates and they were quick and helpful getting it to me.

I assume that based on your yearly compensation you’re at 30% so as long as you’re over 20% you’ll have the VA funding fee waived which is pretty awesome.

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Va Grants For Disabled Veterans

The Department of Veteran Affairs offers home loan programs to help disabled veterans with the cost of buying a home, as well as home modification grants to adapt an existing residence to be more accessible.

To qualify for these programs, the veteran must have a serviceconnected disability, and they must currently live in or be purchasing the home in question.

• Specially Adapted Housing Grants The VAs largest grant, which can be used to buy, build, or change your permanent home . This grant is only available to 120 disabled veterans each year
• Special Housing Adaptation Grants Grants A lower grant amount than the SAH grant, which can also be used to buy, build, or change your permanent home
• Temporary Residence Adaption Grants Intended to help disabled veterans make accessibility upgrades to a family members home theyre living in temporarily. To qualify for a TRA grant, you must be eligible for either an SAH or SHA grant

You can find more information about these programs and apply for a grant on the VA website.

Establish What You Need & What You Can Afford

Before you can start looking for a home you need to know what you are looking for. This is when you have to sit down with your housing counselor to make a list of what you want and need. Ask anybody helping you with current assistance to help you list the needs of your disability. Then return to your housing counselor and implement any additional costs required by your needs into the original financial calculation.

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Social Security Disability Income

When you receive Social Security Disability Insurance , you can use the funds to pay for monthly expenses, including payments on your mortgage. To apply for Social Security disability, you must:

• Be at least 18 years old
• Not yet receiving Social Security retirement benefits
• Have a medical condition that has lasted, or is expected to last, at least 12 months or result in death
• Have not been denied Social Security Disability Insurance benefits in the last 60 days.

To qualify for Social Security Disability Insurance, you must meet certain income and asset guidelines. For a single person, you cannot have more than $2,000 in assets or $3,000 in assets if you are married. However, your home is not counted as an asset to determine eligibility.

Typically, if you are receiving Social Security Disability Insurance, you will qualify for other federal housing assistance programs due to income eligibility requirements.

Are There Home Loans For Disabled Persons With Bad Credit

Mortgage loans for disabled individuals tend to focus on income and down payment flexibility, since lack of income and savings can be a big barrier to homeownership.

But what if you have a low credit score as well?

One option is the FHA mortgage program, which is geared toward home buyers with a lower credit score or imperfect credit history.

FHA loans are insured by the Federal Housing Administration, which means they can have more lenient eligibility guidelines.

FHA will accept a credit score of 580 with just 3.5% down payment.

You might even get approved with a credit score of 500579 but only if you can put 10% down.

Like the other loan programs described above, FHA loans allow both SSI and SSDI income on your mortgage application. According to FHA guidelines, disability income can be verified with any one of these documents:

• Federal tax returns
• The most recent bank statement showing receipt of income from the SSA
• A Proof of Income Letter, also known as a Budget Letter or Benefits Letter that shows income from the SSA
• A copy of the borrowers Social Security Benefit Statement

Another benefit of the FHA loan is that youre allowed to cover 100% of the down payment and closing costs using down payment assistance or gifted money. This eliminates the need to save up a large amount of money before you can buy a home.

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Buying A House On Ssi

Buying a home while on SSI comes with its own set of unique challenges. Most notably, SSI rules limit the amount of income or assets you can have while remaining eligible for benefits. As a result, having enough money to buy a home but not too much that you lose benefits can be a fine line.

Because people on SSI cant have assets valued at more than $2,000 as an individual or $3,000 as a couple, saving up enough cash for a down payment to even consider buying a home is difficult. On the bright side, not all assets count toward those limits. Case in point: The home you live in is considered your primary residence and is not considered an asset.

Although you might face additional challenges, buying a home on SSI is still possible. Lenders look at your income and credit score, just like they would with any other loan applicant. But even if your credit score and income arent up to par, there are programs in place to help you get into a home. Need to find a lender? You can use Zillow to quickly find a lender whos licensed to work in your area.

If you do acquire a home loan, it doesnt count as income and doesnt reduce your SSI benefits.

Loan Types That Allow Ssi

Many mortgage loan programs, from private lenders to government-backed agencies, allow you to use your kids’ SSI as income. Whether a lender will count your child’s SSI benefits depends primarily on whether you can prove the amount received whether the child entitled to benefits will reside in the home with you and whether you are a parent purchasing a place for your disabled child.

The U.S. Department of Agriculture, or USDA, the Department of Veteran Affairs, or VA, as well as state and local public and private agencies can consider SSI as qualifying income for their loan programs. Each lending institution has its own specific requirement, but in general, they must verify the SSI amount, the benefits duration or expected continuity, and determine that your other income meets program guidelines. Expect to provide the lender with your child’s most recent award or benefits letter, your official income documentation, such as tax forms and your bank statements showing SSI payments routinely coming in.

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Using Disability Income To Qualify For A Mortgage

April 5, 2015 by Justin McHood

You have heard the stories stating that you need to be gainfully employed for at least 2 years before a mortgage lender will look at your application, but what happens if you receive disability income? Are you automatically denied? The good news is that disability income is able to be used for almost any type of loan available today, including FHA and VA loans. The bad news is that you will have some legwork ahead of you to prove your ability to afford the mortgage with your income. If you need your spouses disability income to qualify for a loan, you should be ready to be able to prove the income and your eligibility.

Whole Households Benefit From Ssi

Kids might receive SSI for a variety of reasons, such as a parent’s disability, parent’s retirement or parental death. Disabled kids whose parents have limited income may receive SSI, as well. Biological children, adopted kids and stepchildren who are dependents can also get SSI. Mortgage lenders may use SSI payments intended for kids toward your total qualifying income for the loan, which can help you to get a higher loan amount.

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How To Boost Your Chance Of Mortgage Approval

• Borrow less.The lower the amount you apply to borrow from a mortgage lender, the more likely you are to be approved for the loan. A smaller mortgage means lower repayments that youre more likely to be deemed able to afford. You can borrow less by saving a bigger deposit, looking to move into a cheaper house or taking advantage of the schemes listed above.
• Reduce your outgoings. Lenders will check your recent bank statements to make sure youre able to afford your mortgage repayments. By reducing your regular outgoings now, youll come across as a more viable prospect. Start by haggling over the cost of your utility bills and paying off any debt youre paying interest on.
• Apply jointly. You can apply for a mortgage jointly with up to 3 other people. All of your incomes will be considered jointly during affordability assessments, so this should dramatically increase the size of the mortgage deemed affordable to you. Bear in mind that youll be jointly responsible for clearing mortgage debt, even if only one of you has stopped making repayments. Whats more, all homeowners will have to agree on when the property is going to be sold.

Housing Choice Voucher Homeownership Program

HUDs homeownership vouchers can help pay for homeownership costs and mortgage payments. Families or individuals with disabilities do not need to meet the specific income and employment requirements that people without disabilities must meet.

• Requirements:
• Be a first-time home buyer
• Attend and complete the Public Housing Agencies counseling program
• Meet additional requirements depending on your situation we recommend seeking guidance from a PHA counselor

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Parents Buying A Home For A Disabled Child

Parents and caretakers of disabled individuals can access special mortgage programs to buy a home for their adult child.

These programs allow parents to buy the home as an owneroccupied residence, even though they wont live in it. This means they can get better mortgage rates and loan terms than they would if they bought the property as a second home.

One option for parents buying a home for their disabled child is to choose a conforming loan backed by Fannie Mae.

Thanks to a loophole in Fannie Maes rules, a home purchase counts as owneroccupied if its a parent or legal guardian wanting to provide housing for their handicapped or disabled adult child.

Fannies guidelines state, If the child is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the parent or legal guardian is considered the owner/occupant.

This loophole opens up a wide range of conforming mortgage loans for parents or guardians wanting to buy a home for their child. Options include:

• 3% down Conventional 97 loans
• 5% down Conventional 95 loans
• 10% down piggyback loans with no private mortgage insurance
• 20% down conventional mortgages with no PMI

Since the home is considered to be owneroccupied, it can be financed at a low rate without the interest rate markups that come with second homes and investment properties.