Housing Grants for People With Disabilities | 2024

Home loans for disabled adults are widely available

People with disabilities are not only eligible for mortgages but also have access to specialized home loans and grants to help disabled people buy a home.

These specialized disability home loans often feature more lenient credit score requirements and lower down payments. Some even offer grants to cover closing costs or modifications to make the home more accessible.

In this article (Skip to...)

• Disability income
• Income source eligibility
• Loan options
• Grant options
• Non-profit assistance
• Parents buying for a child
• Social Security disability housing assistance
• Disability housing rights
• FAQ

Can I buy a home on disability income?

Yes, you can buy a home on disability income, as long as it is stable, reliable, and expected to continue for the foreseeable future. Many lenders offer home loans to disabled applicants, using disability income as a qualifying source for mortgage applications.

According to the Fair Housing Act, lenders can’t inquire about your disability. However, they will inquire about your income, which can be a major barrier for disabled home buyers.

Staying within your lender’s debt-to-income ratio limits can be difficult if you have little or no income from standard employment. Fortunately, many mortgage programs will accept disability income on your application.

Remember, beyond the standard mortgage loans, there are specific disability home loans and housing grants for people with disabilities that can provide extra assistance in securing your dream home.

Can I buy a house on SSDI or SSI?

Yes, you can buy a house on Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). Both SSDI and SSI are reliable sources of income, and lenders accept them as proof of eligibility for home loans for disabled borrowers.

Eligible income sources for a mortgage can come from:

• Long-term disability income from an employer or insurer
• Supplemental Security Income (SSI) through Social Security
• Social Security Disability Insurance (SSDI)

These types of income are allowed under all the major home loan programs, including conforming, FHA, VA, and USDA mortgages.

However, mortgage lenders set their own lending guidelines and may choose not to accept certain kinds of income. So if you’re denied due to disability income on your application, try again with a different lender. You might receive approval elsewhere.

Disability income requirements for home loans

Like any other form of income, disability income needs to be properly documented for a mortgage lender to count it on your home loan application.

The most important thing is that you can verify that your disability income will continue for at least three years or that you have a guaranteed job once you’ve recovered at the same income level as before. In the latter case, you would qualify for the lower of the two monthly income streams.

If you receive long-term disability income or insurance benefits, your lender will need to see a disability policy or statement from the payer of the benefits (typically the insurance company or a former employer).

The income documentation requirements for SSI and SSDI depend on who is applying for the loan. If the mortgage applicant is the person receiving SSI or SSDI income, you can document it one of two ways:

1. The Social Security Administrator’s (SSA) Award Letter
2. Proof of current receipt

If the mortgage applicant is not the person receiving Social Security benefits (for example, a parent buying a home for a disabled child), they will need to present both of the documents above. They’ll also need to prove the income will continue for at least three years—for example, by verifying the recipient’s age.

Home loans for disabled home buyers

People with disabilities—and parents who want to buy a home for a disabled child—can get special mortgages. These special mortgages ensure affordability and accessibility, and they often include options like government home loans for disabled borrowers and grants to help disabled individuals buy a home.

Additionally, homeownership assistance programs exist for people who are not disabled but live with qualified disabled people. Caregivers or home health care providers who live with a disabled family member often qualify for special disability home loans.

If you qualify for Medicaid in your state or get disability payments from the government, you may be able to use one of a number of special mortgage programs. That still holds true if you have a low income despite working.

Who will own and occupy the property and how they will pay their mortgage, will determine the program’s requirements. In addition, they vary depending on whether the program is local, state, or federal.

Here are several of the best-known home loans for disabled buyers.

1. Fannie Mae HomeReady Loan

Fannie Mae HomeReady is a special conventional loan program that helps people with low to moderate incomes and good credit get affordable financing options, including disabled people.

The program aims to help eligible home buyers by giving them competitive interest rates, lower down payment requirements (as low as 3%), and more flexible credit rules. HomeReady also helps disabled borrowers by taking into account non-traditional income sources like Social Security and long-term disability benefits.

In fact, Social Security Disability Insurance (SSDI) and Supplemental Security Insurance (SSI) are both acceptable income sources for the HomeReady loan program.

Who qualifies for HomeReady?

To qualify, disabled home buyers need the following:

• A credit score of 620 or higher
• At least a 3% down payment
• Low- to moderate-income (no more than 80% of their area’s median income)
• Must occupy the home as a primary residence

The good news is that your down payment money doesn’t have to come out of your own savings. HomeReady lets you cover the entire down payment using down payment assistance funds, money gifted from a family member or caretaker, or housing grants for people with disabilities.

This makes HomeReady among the best home loans for disabled borrowers because many other mortgage programs require buyers to pay at least some of the purchase price out of pocket. This can be a challenge if your income is fixed.

Buying with non-occupant co-borrowers under HomeReady

Along with its low down payment, HomeReady offers a big benefit: It allows “non-occupant co-borrowers.” A non-occupant co-borrower does not live with you but is included in your mortgage application process.

You can use your non-occupant co-borrower’s credit history or income to help you qualify for a loan if you don’t meet the credit or income limits on your own.

For example, a parent or sibling with strong credit and a high income is often added to their disabled family member’s mortgage. Remember that the total income counted toward your mortgage qualification must remain below HomeReady income limits.

Fannie Mae does not underwrite HomeReady loans directly. Instead, it works with participating private lenders, which allows disabled home buyers to shop around for the best mortgage rates.

2. FHA home loans for disabled adults

The Federal Housing Administration (FHA) provides government home loans for disabled adults with low credit score minimums and low down payment requirements.

FHA loans are made for people with low credit scores or low incomes who may have trouble getting traditional mortgages. And they also accept disability income as a qualifying source, provided it is stable and well-documented.

FHA loans help disabled people achieve their dream of homeownership by offering low down payment options (as low as 3.5% for qualified borrowers), flexible credit rules, and competitive interest rates. Therefore, if you’re seeking government home loans for disabled buyers, an FHA loan is a strong option.

Who qualifies for an FHA loan?

FHA loans allow both SSI and SSDI income on your mortgage application. FHA rules say that you can use any of the following documents to prove disability income:

• Federal tax returns
• The most recent bank statement showing receipt of income from social services programs
• A Proof of Income Letter, also known as a “Budget Letter” or “Benefits Letter,” shows income from the SSA
• A copy of the borrower’s Social Security Benefit Statement

Another benefit of the FHA loan is that you can 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.

On the downside, you’d probably have to pay the FHA’s mortgage insurance until you pay off the house—unless you refinance out of the loan sooner.

3. VA home loans for disabled veterans

The U.S. Department of Veterans Affairs-backed VA loan program is among the best home loan programs available. In addition to offering some of the lowest mortgage rates available, VA loans don’t require a down payment. This makes VA loans appealing to any veteran or service member.

But there are more VA loan benefits for veterans with medical problems or disabilities caused by their service:

• You can include VA disability income on your mortgage application.
• You are exempt from paying the VA loan funding fee. Spouses of veterans who died in the line of duty may also be exempt
• There are 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
• You may be eligible for a property tax exemption and/or a mortgage tax credit to reduce your taxable income. Requirements vary by state, level of disability, and other factors. Check with your state’s tax authority for more information

You’ll also need to meet the VA’s standard lending requirements to qualify for one of these loans.

Income from disability benefits can be used to satisfy VA loan income requirements. Technically, there’s no minimum credit score to qualify for a VA loan. However, many lenders require a FICO score of at least 580 to 620.

4. USDA home loans for disabled persons

The USDA loan program, which is guaranteed by the U.S. Department of Agriculture, is another zero-down mortgage that enables qualified borrowers with disability income to purchase a home. The USDA has two loan programs: USDA Direct and USDA Guaranteed, both of which are excellent options for those seeking government home loans for disabled borrowers.

USDA Guaranteed Loans

While the USDA backs these loans, they don’t come directly from the federal government. They come from private lenders that the USDA has approved. Many mainstream mortgage lenders offer USDA Guaranteed loans.

USDA Guaranteed loan requirements typically include the following:

• Income is no higher than 15% above your area’s median income
• A credit score of at least 640
• The home you’re buying must be in a USDA-approved “rural area”

USDA Direct Loans

Homebuyers with disabilities whose income falls below the area’s median income may qualify for a USDA Single Family Housing Direct Loan.

The Direct Loan is a subsidized mortgage program, meaning that the USDA will help pay for a portion of the homeowner’s monthly mortgage payments. The applicant’s household income determines their eligibility for this housing program and how much payment assistance they will receive.

Another significant advantage of the USDA Direct mortgage program is that fixed interest rates can be as low as 1% (when modified by payment assistance).

Who qualifies for a USDA Direct Loan?

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 non-citizen 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 can’t exceed 2,000
• The home price must be within local loan limits
• The home must not be designed for “income-producing activities”

Those who qualify for a USDA Direct Loan can use the funds to purchase a new or existing home. In addition, they can build, repair, or renovate a house.

The payback period ranges between 33 and 38 years. This extended repayment with a low rate helps make payments affordable.

How to apply for a USDA Direct Loan

Unlike USDA Guaranteed loans, private lenders do not offer USDA Direct Loans. You’ll have to apply with your local Rural Development Office. Be aware that application processing times could be longer and the process could be less convenient. Buyers who can qualify for the USDA Guaranteed loan program should try that first.

Disabled buyers with moderate incomes who don’t qualify for the USDA’s subsidized program can still access a USDA Rural Housing loan. It has looser guidelines but still allows zero down and offers below-market mortgage rates.

5. HUD Housing Choice Vouchers (Section 8 homeownership voucher program)

The Section 8 program run by the U.S. Department of Housing and Urban Development (HUD) is best known for offering rental housing assistance to low-income families.

But there’s also a lesser-known Section 8 housing program for home buyers, called the “Housing Choice Voucher (HCV) homeownership program.” What’s more, this program provides housing assistance to disabled buyers who meet its eligibility requirements.

“Keep in mind that not all lenders underwrite these types of loans,” cautions Jon Meyer, loan expert and licensed MLO. “You’ll need to use one of the program’s participating lenders.”

People who are eligible for Section 8 rental assistance can use their voucher to buy a home instead, thanks to the homeownership voucher program. In this case, HUD would assist in covering mortgage payments and other homeownership costs instead of rent.

Who qualifies for HUD’s Housing Choice Voucher program?

To qualify for this housing assistance program, you’ll need a current Section 8 voucher. If you do not have one, you can talk to your local public housing authority about meeting with a housing counselor to start the process.

Keep in mind that not all PHAs participate in the HCV homeownership program. Section 8 voucher waiting lists can be lengthy.

Other requirements for the Section 8 homeownership program include:

• Household income not below the monthly federal Supplemental Security Income (SSI) benefit for an individual living alone
• Buying an acceptable property according to HUD’s guidelines
• Participation in PHA’s pre-assistance homeownership and housing counseling program

For qualified home buyers, the homeownership voucher funds can be used for:

• Mortgage principal and interest, real estate taxes, and homeowners insurance
• Mortgage insurance
• Utilities, maintenance, and major home repairs
• Costs to make the home accessible for independent living if needed. Home improvements can include building ramps

As a housing voucher holder, you’ll pay around 30% of your adjusted monthly income for housing. That is a good deal for those who qualify. But if you don’t, any of the other home loans for disabled borrowers on this list may be a better fit for you.

Financial assistance and grants for disabled home buyers

When it comes to home buying assistance for disabled borrowers, it’s important to understand the distinction between grants and home loans. Housing grants for people with disabilities don’t require repayment and are typically provided by government entities or non-profits.

On the other hand, home loans for disabled individuals are borrowed funds that need to be repaid over time but can offer more substantial amounts to finance the entire home purchase.

Down payment assistance grants

Every state has a selection of down payment assistance programs (DPAs), which offer funds to help cover home buyers’ down payment and/or closing costs. These are typically designed for first-time home buyers and home buyers with low incomes.

Down payment assistance comes in two different forms:

• Grants: Assistance that never has to be repaid
• Loans: Assistance that must be repaid. DPA loans typically have low or no interest, and many are forgivable if the homeowner keeps the home a set number of years (often 5–10)

Typically, your state’s Housing Finance Agency or county and local governments will offer these assistance programs. Some non-profit organizations also provide DPAs.

You can learn more about down payment grants here, or ask your real estate agent or loan officer to help you find programs once you’ve started the home-buying process.

VA grants for disabled veterans

The Department of Veteran Affairs has home loan programs and home modification grants to help disabled veterans buy a home or make their current home more accessible.

To qualify for these VA grants for disabled veterans, applicants need to fulfill two primary conditions:

1. Their disability should be service-related, as officially determined by the VA
2. They must be living in or actively buying the specific home for which the grant is intended.

The VA offers several grants to help disabled individuals buy a home:

• Specially Adapted Housing (SAH) Grants: The VA’s largest grant, used to “buy, build, or change your permanent home” (a home you plan to live in for a long time). This grant is only available to 120 disabled veterans each year
• Special Housing Adaptation Grants (SHA) Grants: A disability grant used to “buy, build, or change your permanent home” that is less than the SAH grant.
• Temporary Residence Adaption (TRA) Grants: Intended to help disabled veterans make accessibility upgrades to a family member’s home they’re living in temporarily. To qualify for a TRA grant, you must be eligible for either an SAH or SHA grant

USDA Single-Family Housing Repair Grant

The U.S. Department of Agriculture offers a Housing Repair Grant to help low-income families “repair, improve, or modernize homes, or remove health and safety hazards.”

The USDA Housing Repair Grant can provide eligible homeowners with a grant of up to $10,000 or a loan of up to $40,000 to pay for home repairs and upgrades. The more popular choice, loans, have a 20-year repayment period and a fixed interest rate of just 1%. You can also combine grants and loans to receive up to $50,000 in total assistance.

To qualify for this housing grant, the borrower must:

• Be the homeowner and occupy the house
• Be unable to obtain affordable credit elsewhere
• Have a family income below the “very low limit by county”
• For grants, be age 62 or older and not be able to repay a repair loan

Nonprofit help for disabled home buyers

Nonprofit help for disabled home buyers is readily available through four major national programs, each designed to assist low-income families and disabled individuals in becoming homeowners.

These programs often offer home loans for disabled buyers that are tailored to meet their unique financial situations. For example, certain programs focus on providing grants to help disabled people buy a home, offering substantial financial assistance for down payments or renovations.

National Disability Institute

The National Disability Institute (NDI) focuses on creating better financial opportunities for people with disabilities and their families, including initiatives like employment support, technical assistance for disability home loans, and financial education.

Collaborating with financial institutions, state and local government housing programs, and various organizations, the NDI helps secure housing grants for people with disabilities and simplifies the process of acquiring government home loans for disabled individuals.

Habitat for Humanity

Habitat for Humanity constructs homes that meet standards set by the Americans with Disabilities Act (ADA), making them accessible for individuals with disabilities. Habitat for Humanity’s program also offers affordable disability home loans to approved applicants.

Prospective homeowners apply through local affiliates and participate actively in their home’s creation, a concept known as “sweat equity.” This involvement can extend beyond physical construction to include educational classes or volunteer work in a Habitat ReStore.

Rebuilding Together Americorps

Rebuilding Together AmericaCorps is dedicated to constructing affordable, accessible homes for families, particularly those with disabled members facing mobility challenges.

Their statistics reveal that over half of the households they assist include a person with a disability, emphasizing the need for homes that accommodate mobility issues and ensure safety.

Alongside building affordable housing, they specialize in modifying existing residences, making them safer and more accessible for disabled individuals.

Homes for Our Troops

Homes for Our Troops offers a vital service to veterans injured post-September 11, 2001, by providing specially adapted, mortgage-free homes. These custom homes cater to the unique needs of disabled veterans, ensuring a safe, barrier-free living environment.

Eligibility requires retirement status or pending retirement and the successful completion of background checks. Their website is a resource for exploring housing grants for disabled veterans and learning more about government home loans for disabled service members.

Financial aid and grants for parents of disabled children

Parents and caretakers of people with disabilities can access special mortgages to buy a home for their adult child.

These home loans are specifically designed for disabled individuals and enable parents to purchase accessible residences on an owner-occupied basis, even if they themselves won’t be living there. This means they can get better mortgage rates and loan terms than if they bought the property as a second home.

Fannie Mae home loans for parents of disabled children

Parents who want to buy a home for their disabled child can choose a Fannie Mae-backed conforming loan as one option. With a Fannie Mae-backed loan, a home purchase counts as owner-occupied if it’s a “parent or legal guardian wanting to provide housing for their handicapped or disabled adult child.”

Fannie’s 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.”

Fannie Mae offers 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 (PMI)
• 20% down conventional mortgages with no PMI

Since the home is owner-occupied, you can finance it at a low rate without the interest rate markups that come with second homes and investment properties.

Using Social Security benefits

If a parent or legal guardian gets disability benefits from Social Security for a child or other dependent, they can use this income to qualify for a mortgage.

In order for the disability income to be eligible, the parent or guardian needs to show an SSA award letter, proof of current receipt, and proof that the income will continue for at least three years.

Options for disabled buyers unable to purchase a home

Navigating the housing market is a unique experience for each individual, and the reality is that not everyone is able to purchase a home.

However, there is a silver lining for those who are ineligible for home loans for disabled buyers. Many may qualify for special housing assistance designed to address their specific mental illnesses or physical disabilities. Let’s explore these options.

Social Security disability housing assistance

Receiving Social Security Disability Insurance (SSDI) benefits can be a lifeline, especially for those with mental illnesses. These benefits, while primarily serving as income replacement, can be a pivotal resource in securing housing opportunities. Social security disability housing assistance programs are available to help SSDI recipients find affordable and accessible housing options.

However, keep in mind that Social Security, while providing old age, survivor, and disability benefits, does not directly extend housing assistance to its beneficiaries. Nevertheless, there exists a range of social programs designed to cater to the needs of low-income individuals, persons with disabilities, and seniors by offering vital housing support.

As a result, a lot of people who get Social Security can use these different programs because they often fall into one or more of these eligible groups. This gives them access to the important housing help they need.

Housing Choice Voucher Program (Section 8)

Section 8 Housing Choice Vouchers are a godsend for many, especially non-elderly disabled individuals. Designed to assist very low-income families and those with disabilities, these vouchers provide subsidies to rent in the private market.

Public housing agencies distribute these vouchers, and they can be a significant step towards accessible housing. Income, including SSDI benefits, and disability status are taken into account when determining eligibility.

HUD’s Continuum of Care (CoC) program

The CoC program goes beyond just offering shelter. It’s about creating a comprehensive support system that addresses the root causes of homelessness. By offering specialized supportive services tailored to individual needs, the CoC ensures that everyone, from extremely low-income people to very low income individuals, has a shot at stable, accessible housing.

In situations where individuals with disabilities find themselves facing homelessness, the local CoC becomes a vital lifeline, offering essential assistance in finding immediate shelter for safety and rest. Moreover, the CoC goes beyond providing temporary relief and aims to foster long-term stability by connecting disabled individuals to transitional housing programs.

HUD-Veterans Affairs Supportive Housing (HUD-VASH)

The HUD-VASH program provides supportive housing for our disabled veterans, especially those who are at risk.

This initiative, a collaboration between HUD and the VA, provides both housing options and case management services. The combined effort ensures participants receive the care and support they need.

HUD-VASH vouchers function similarly to other Housing Choice Vouchers (HCVs), but with additional benefits and assistance, such as dedicated assistance during your housing search.

National Housing Trust Fund and Section 811

The National Housing Trust Fund, along with Section 811, focuses on creating housing options for the most vulnerable, including those with mental illness, physical disabilities, and extremely low-income households.

Section 811, in particular, offers supportive housing for non-elderly people with disabilities. These programs provide subsidies and supportive services, ensuring participants have access to affordable and accessible housing.

Allocations of NHT funds are distributed on a state-by-state basis, tailoring support to the specific needs and priorities of each region. If you are interested, the best course of action is to get in touch with your state’s housing finance agency.

HUD’s $212 Million Boost for Section 811 Program

The U.S. Department of Housing and Urban Development (HUD) has recently announced a $212 million funding opportunity aimed at increasing affordable housing options for people with disabilities. This funding will not only help in creating new housing but also in rehabilitating existing units.

The funds are specifically designated for the Section 811 Supportive Housing for Persons with Disabilities program. This initiative seeks to both expand housing availability and offer supportive services for those with very-low to extremely-low incomes, making it a significant development in the realm of home loans and grants for disabled individuals.

For those interested in taking advantage of this opportunity, further details can be found in the funding notices for the Section 811 Capital Advance Program and Section 811 Project Rental Assistance. It’s important to note that the deadline for submitting applications is February 8, 2024, so timely action is essential.

Where can I find Social Security disability housing assistance?

If you or someone you know is in need of housing assistance, it’s important to gather the necessary contact information for these programs. Local public housing agencies, community centers, and online platforms often have directories and resources.

Remember, subsidies, supportive housing, and other services are within reach. It’s all about taking that first step.

Disability rights for home buyers

For people with disabilities, navigating the housing market can be difficult. Understanding your legal rights is key, especially when seeking home loans for disabled buyers or housing grants for people with disabilities.

Here are key legal protections:

• Fair Housing Act: This act prohibits discrimination in housing based on disability. It mandates accessible features in buildings constructed post-1991, ensuring housing accessibility for disabled individuals.
• Americans with Disabilities Act (ADA): This law, passed in 1990 and updated in 2009, ensures equal access for people with disabilities in public spaces and services, reinforcing their rights in various sectors, including housing.
• Equal Credit Opportunity Act (ECOA): Enacted in 1974, ECOA protects individuals, including those with disabilities, from credit discrimination, ensuring fairness in financial transactions such as mortgages.
• Section 504 of the Rehabilitation Act of 1973: This section forbids organizations receiving federal assistance from discriminating against individuals with disabilities. It guarantees equal access to services and benefits, including those related to housing.

These laws protect disabled people’s rights in the housing market, assisting them in finding appropriate and equitable housing solutions.

FAQ: Home loans for disabled buyers

Bottom line: Home loans and housing grants for disabled adults

Mortgage lenders can connect you with loan programs that help people with disabilities become homeowners.

Shop with several competing lenders to find the best program and the most competitive interest rate for you. There are many assistance programs for disabled home buyers, especially for low-income families or individuals.

In addition, be sure to ask your loan officer, real estate agent, or Realtor about financial assistance programs available in your area. These programs can make buying your own home more affordable than many people expect.