Best programs for getting a mortgage with a disability in 2018
Getting a mortgage with a disability may be easier than you think
Some people mistakenly believe they can’t own a home or get a mortgage because of a disability.
That’s an understandable misconception. Fortunately, it’s wrong.
Qualifying for these mortgages can be easier than for traditional home loans, and they offer some of the lowest interest rates available.
That empowers disabled persons to achieve homeownership or get into a better home loan than they are in now.
Even if you’ve been turned down before, now could be the time to apply for one of today’s programs.Check your mortgage eligibility here. (Dec 9th, 2018)
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Special mortgages exist for people with disabilities, and for parents buying a home for a disabled child. In addition, there are mortgage programs for able-bodied people who live with qualified disabled residents.
- If you receive government disability income, you are probably eligible for several mortgage programs.
- Programs to consider include the section 8 homeownership voucher program and the USDA single-family housing Direct home loan, and VA Home Loans for Disabled Veterans.
- There are many state and local resources that provide home buying help, as well as down payment assistance programs available for disabled home buyers.
Several great options
Special mortgages exist for people with disabilities, and for parents buying a home for a disabled child. In addition, there are mortgage programs for able-bodied people who live with qualified disabled residents. For instance, a caretaker who shares a home with his disabled sibling might get a special mortgage.
If you receive government disability income, you are probably eligible for several mortgage programs. That’s also true if you work but earn a low income.
Program requirements depend on who will own and occupy the property, and how the occupants will pay their mortgage. They also depend on whether the program is federal, state or local.
Here are several of the best-known plans, including programs offering down payment assistance.
Section 8 homeownership voucher program
Managed by Housing and Urban Development (HUD), this program is for Housing Chance Voucher Program or Section 8 participants.
Not every Public Housing Authority (PHA) participates, but those that do allow rental voucher holders to buy homes. If you don’t have a Section 8 voucher, you can apply for one. However, waiting lists may be long.
What the Section 8 homeownership voucher covers:
- Mortgage principal and interest, real estate taxes and homeowners insurance
- Mortgage insurance
- Utilities, maintenance and major repairs
- Costs to make the home accessible, if needed
Qualifications and requirements:
- Section 8 voucher from a participating PHA
- Household income not below the monthly Federal Supplemental Security Income (SSI) benefit for an individual living alone
- An acceptable property
- Participation in PHA’s pre-assistance homeownership and housing counseling program
As a housing voucher holder, you’ll pay around 30 percent of your adjusted monthly income for your housing.
USDA single-family housing Direct home loans
The USDA oversees two programs, a Guaranteed program and a Direct program. The Direct program offers special subsidized financing for low-income households.
You don’t need a down payment for this mortgage. In addition, your fixed interest rate can be as low as one percent.
Importantly, don’t borrow unless you plan to stay. Because, if you leave or transfer the title, you have to repay part or all of your payment assistance immediately.
- Does not have safe, decent or sanitary housing
- Unable to get an affordable mortgage
- Meet citizen or eligible noncitizen requirements
- Not barred from federal loan programs
- Income does not exceed program limits for your area
- Square footage usually can’t exceed 2,000
- Price can’t exceed area loan limit for 100 percent loans
- No in-ground swimming pool
- Must be primary residence, and cannot generate income
Borrowers can use the loan to buy a new or resale home. In addition, they can build, repair or renovate a house. The payback period is 33-to-38 years. This extended repayment, combined with the low rate, helps make payments affordable.
USDA Guaranteed home loan program
Buyers with moderate income should consider the Guaranteed home loan program. It has higher income limits and offers more options for borrowers.
With the Direct program, the government actually lends the money. However, the Guarantee program just backs loans made by private lenders. It’s kind of like the FHA loan but only available in rural areas.
VA Home Loans for Disabled Veterans
In addition to the mortgage benefits available to qualified veterans, wounded warriors have extra advantages when obtaining a mortgage with a disability. Those include:
- Funding fee exemption: If you have a service-related disability, you might not have to pay this fee. In addition, spouses of veterans who’ve died from such injuries may be exempt.
- No minimum service requirements: If you have a service-connected disability, there is no minimum time to serve before you’re eligible for a VA home loan.
- Home modification grants: You may be eligible for grant money to make a home accessible. The Specially Adapted Housing (SAH) Grant and Special Housing Adaptation (SHA) Grant cover those costs.
Also, check with your state tax agency to see if you’re eligible for a property tax exemption and/or a mortgage credit. Requirements vary by state, level of disability and other factors.
Nonprofit homeownership programs for the disabled
Two national programs help low-income disabled people become homeowners. Habitat for Humanity builds accessible homes. Also, it provides affordable mortgages to those approved for their program. You apply through the local affiliate, and you must be willing to help build your home.
Another option is Rebuilding Together AmericaCorps. The agency prides itself on building homes for families with one or more disabled members.
Homes for Our Troops offers mortgage-free homes for veterans wounded in overseas combat after September 11, 2001. You must be retired or in the process of retiring and pass a criminal and credit background check.
Mortgage with a disability: additional resources
There are many state and local resources for home buying help. Among those are the National Council of State Housing Agencies and HUD’s Local Homebuying Programs. Also, if you need it, you can find down payment assistance specifically for disabled home buyers.
What are today’s mortgage rates?
Current mortgage rates for all programs, including those for disabled borrowers, are very, very low. However, you should still shop with several competing lenders and choose the most competitive deal.Verify your new rate (Dec 9th, 2018)