The intricacies of Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits make many homebuyers ask questions like, “will I lose my SSI if I buy a house?” and “What are the eligibility requirements for SSI and SSDI benefits even if I own a home?”
The basic answer is: a person receiving SSI and SSDI payments can qualify to buy a home but will most likely face additional challenges because of their status. Generally, to be eligible for these benefits, you must be a US citizen, either disabled or with limited income and resources.
Meeting these requirements should technically make you eligible for SSI or SSDI benefits even if you buy a house, but there are some caveats. With that in mind, these are the basics of SSI and SSDI stipends and what to do should you require one or the other.
How SSI and SSDI Works
Supplemental Security Income (SSI) is a stipend program for adults aged 65 and older with a physical disability and limited income. These benefits are currently given out monthly at a rate of $794 per person and $1,191 per couple.
SSI beneficiaries are usually those who have earned modest earnings and have not worked full-time in recent years. The good thing about this program is that beneficiaries do not pay to apply for the SSI program. Benefits are paid out of the general fund of the United States Treasury.
On the other hand, Social Security Disability Insurance (SSDI) is a stipend program available to anyone under the age of 65. Still, it requires the recipient to obtain affordable credit, which means you must have worked for an extended period before you can qualify for SSDI.
These benefits are given out monthly at a current rate of $3,148. While SSDI beneficiaries may create additional challenges when purchasing a home, they are not subject to the same income limits as SSI beneficiaries.
The issue is that neither lenders nor receivers of SSDI benefits have any idea how long their payments will continue. As a result, determining whether recipients have a consistent income is difficult because the Social Security Administration (SSA) only offers verification that people are receiving benefits, not future guarantees.
Buying a House on SSI
You might be wondering, “Will I lose my SSI if I buy a house?”. Well, purchasing a home while receiving Supplemental Security Income (SSI) presents its own unique set of obstacles. So, if you’re asking yourself, “can you own a house on SSI?” This section is for you.
For instance, SSI rules limit the amount of income or assets you can have while still receiving benefits.
Saving enough money for a down payment, to even consider buying a home, is difficult for disabled individuals on SSI because they can’t hold assets worth more than $2,000 per person or $3,000 per couple.
On the plus side, not all assets are included. For example, the house you live in is considered your primary residence and not an asset. As such, buying a home on SSI is still achievable, despite the high hurdles.
That said, Mortgage lenders will still examine your income and credit score the same way that they do for any other loan applicant. Even if your credit score and salary aren’t ideal, there are programs available to assist you in purchasing a home.
Nonetheless, obtaining a home loan does not count as income and doesn’t affect your SSI benefits.
The Home Buying Process: Basic Tips for Purchasing a House While Disabled
Before you start considering buying a house on disability, one of the first things you should do is educate yourself about the home buying process. Many excellent resources are accessible online, and you can even contact an expert for extra info. For now, let’s have a look at the process in detail.
1. Understand Your Credit Score and Work to Improve It if Necessary
Your credit score is essential when it comes to home loan options. It’s an excellent idea to verify your score ahead of time so you can enhance it if necessary. Paying off debt, paying bills on time, and disputing inaccurate demerits on your credit history are all steps you can take to improve your score.
Since buying a home is a significant investment, having credit repair experts assist you may be beneficial.
2. Consider Your Budget as Well as What You’re Looking for
Use a mortgage calculator to figure out how much you can pay and how it will fit into your budget. Keep in mind that if the home you choose doesn’t meet your requirements, you may need to set aside money for renovations.
Since different homes have different layouts, it’s crucial to know what you want before you start to search for a home. With regard to the financial aspects, consult a financial advisor or a home loan expert if you aren’t well-versed in finance.
3. Invest in a Comprehensive Home Inspection
You shouldn’t skip or rush your home inspection. Spending a few hundred dollars can save you thousands in the long term.
4. Look Into Other Programs That Might Interest You
There are usually programs available if you are a veteran, first-time buyer, or have a lower income. You can take advantage of these programs to get yourself a better home. As a result, it’s vital not to overlook this step when purchasing a home on disability.
Programs to Help You Buy a Home
Some programs can assist you in purchasing a home if you are receiving SSI benefits.
Fannie Mae Loans
Fannie Mae is a government-sponsored entity that helps support disabled individuals who want to buy a home but have limited income. Even if you have a lower credit score, you may still be eligible for a home loan through this program if you’re receiving Social Security benefits.
However, that will depend on your accrued monthly benefit. Fannie Mae could also be able to help you get a loan to renovate the house you’re buying if the home buying process is directly tied to your debilitating condition.
That said, the program’s requirements mandate you have a credit score of 620 or higher, have a debt-to-income ratio (DTI) of not more than 50%, and be able to pay the down payment of 3 – 5%. The maximum loan obtainable for home buyers was between $548,250 – $822,375 in 2021, for one unit, depending on the area.
An Federal Housing Administration (FHA) loan could be an excellent option for you, even if your credit history is relatively low. The FHA backs and insures the loans, and they have lower down payment requirements than most conventional loans.
However, the loan requirements mandate home buyers to have a credit score of 580 or above with a low DTI, have the home evaluated by an FHA-approved appraiser, complete a home inspection and report, and occupy the property within 60-days.
The maximum loan obtainable in 2021 was $822,375.
Housing Choice Voucher (HCV) Homeownership Program
HCV is ideal for people who require assistance with their mortgage payments. Disabled individuals can use homeownership vouchers from the program to pay for homeownership costs and mortgage loans.
Regardless, you’ll need to be a first-time home buyer and complete the Public Housing Agencies (PHA) counseling program to qualify for the HVC homeownership program.
You can meet additional requirements later on, depending on your situation. However, it’s recommended you seek guidance from a PHA counselor.
USDA Home Loans
The Single-Family Housing Guaranteed Loan Program and Single-Family Housing Repair Loans And Grants are two essential USDA loans also worth considering. The former lends money to low-income people who live in rural areas whereas the latter provides funds to help low-income families upgrade, repair, modernize, and eliminate safety hazards from their homes.
For USDA Single-Family Housing Direct Home Loans, you’ll need to prove that you don’t have access to safe, quality housing, and you can’t get a loan from other sources. In essence, it’s ideal for people who need a home and prefer a more rural lifestyle.
However, for the USDA Single-Family Housing Repair Loans And Grants, you need to be the owner and occupant of the home and have a family income of less than 50% of the area median income. This makes it ideal for people who need to make home improvements.
Habitat For Humanity
Habitat for Humanity is a non profit organisation that helps disabled individuals find places to live. The program requires potential homeowners to donate “sweat equity” to build their homes.
They can accomplish this by working on the house and enrolling in personal finance or homeownership classes. The program requires you to show a willingness to collaborate with Habitat and pay an affordable mortgage.
In a nutshell, it’s ideal for people who need a home and are willing to get involved in the building phase of the process.
Section 8 is another program for prospective homeowners. Many people believe that Section 8 assistance is only available to renters; however, the program can also help disabled people buy a home.
If you’re eligible for the program and your local Section 8 office participates in the homeownership voucher program, you may qualify for monthly mortgage payment assistance which could make affordable housing easier to get.
Down Payment Issues
You may have concerns about coming up with the down payment for your home if you get SSI benefits and you’re able to qualify for mortgage programs. Fortunately, there are a number of assistance programs that can help you meet the down payment requirements.
For example, when you receive Social Security Disability benefits, the Fannie Mae program may need a down payment of as little as $500. For other programs, you might want to look into “sweat equity” options or make a full-price offer if the seller is willing to extend the down payment.
You can also check into grants or donations (such as the SHA grant or TRA grant) for your down payment needs if you receive Social Security benefits. Some programs, such as the IDA program, allow you to save money for a down payment and match a portion or all of the money you put into the IDA account for the home purchase.
So, if you save $1,500 from your Social Security Disability earnings for a down payment, the matching gift will be $1,500, giving you a total of $3,000 to put down on a property.
Cases When Social Security Can Exclude Your Home as an Asset for SSI Disability
Social Security usually does not count your home against the asset limit for SSI purposes. However, you must fulfill the Social Security Administration’s (SSA) definition of being disabled and meet other income and asset limits to qualify for service-connected disability benefits through the SSI program.
To qualify for SSI, a single person can only have $2,000 in assets, and a married couple can only have $3,000 in assets. If you meet the specific criteria, some assets, such as your home, will not be considered when establishing your eligibility. This clause is otherwise known as “home exclusion.”
What You Should Know About the Home Exclusion
To be eligible for the home exclusion, you must own the residence outright, share ownership with others (such as a family member), or have an equitable interest in the property. Furthermore, the house must be your primary residence.
The SSA does not evaluate the home’s value when deciding whether to exclude it. Also, the land you built the house on, as well as any structures on it (such as a barn or garage), will not count against your assets.
However, there are a few unusual scenarios where Social Security will not exclude your home or the land owned from your income. This is related to the type of SSI and property ownership interest.
If you’ve been wondering, “will I lose my SSI if I buy a house?” then you should know that there are options available to assist you if you receive SSI benefits and wish to buy a home. Many not-for-profit organizations want to help Social Security Disability recipients realize their dream of homeownership.
Everyone needs a home that is both accessible and secure. As such, it’s vital to educate yourself on the home buying and financing processes, to be aware of your rights, and check into local nonprofits and federal programs for aid.
You could contact a local real estate agent for some legal advice on mortgage loans to help you know how you can finance the purchase of your home.
That said, if you’re a first-time DIY property investor or homebuyer, you’re probably already overwhelmed by the homebuying process. However, there’s no need to do it alone, homebuying is much easier with some help, especially from an expert.