The Complete Guide to Home Loans for People with Disabilities
By Jeff Smith
Reviewed by Lauren Bringle, AFC®
If you’re part of the 25%
of U.S. adults living with a disability, you’re likely used to overcoming obstacles. However, when it comes to buying a home, the process may seem daunting. Renting may not be an option due to the lack of necessary accommodations, so buying is often the best choice to ensure your home fits your needs.
While securing a mortgage and buying a home has its upsides, there are also some potential risks to be aware of. First off, you are responsible for all maintenance and repairs. You must either perform them manually, or pay someone to take care of it for you. Depending on your disability and income level, this may be especially difficult.
Lastly, it’s important to build up a solid amount of savings before buying. That way, you’ll be able to make the necessary changes to improve accessibility, and you won’t struggle to pay your mortgage or even lose your home. This would likely hurt your credit
, making it harder for you to find a mortgage or landlord in the future.
Despite the challenges of being a homeowner, you’ll be glad to know that there are several mortgage options and financial aid programs available to make it easier. This guide is intended to provide all the information you need to secure a home loan while living with a disability.
Table of Contents
- How Does the Government Define a Disability?
- Federal Mortgage Programs for People with Disabilities
- Non-Profit Organizations Offering Financial Assistance
- Knowing and Understanding Your Rights
- Additional Resources
How Does the Government Define a Disability?
The federal government defines a person with a disability as someone who:
- Has a physical or mental impairment that substantially limits one or more “major life activities”
- __ Has a record__ of such an impairment
- Is regarded as having such an impairment
“Major life activities
,” as defined by the the Department of Housing and Urban Development (HUD
), include walking, speaking, hearing, seeing, breathing, working, learning, performing manual tasks, and caring for oneself. It also includes the operation of major bodily activities.
HUD gives examples of a “physical or mental impairment
” such as orthopedic, visual, speech and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, HIV, developmental disabilities, mental illness, drug addiction, and alcoholism.
These are just a few examples of types of disabilities. Any impairment that is found to impose a substantial limitation on a major life activity is considered a disability by the federal government and will qualify you for mortgage programs and financial assistance for people with disabilities.
Federal Mortgage Programs for People with Disabilities
Thanks to numerous government-sponsored associations, there are plenty of mortgage programs and disability loans available for people living with disabilities. Take some time to consider your options and find the one that best fits your needs.
HUD offers the Housing Choice Voucher (H.C.V.) homeownership program. If you don’t have a voucher, you will need to find a Public Housing Agency that offers an HCV loan program in your area. To help, visit their homeownership enrollments report
. Keep in mind that waiting lists may be long.
An HCV covers the cost of the mortgage principal and interest, real estate taxes, homeowners insurance, mortgage insurance, utilities, maintenance and repairs, and the cost of making the home accessible.
These are the requirements to obtain a voucher:
- Your income must not fall below the minimum Supplemental Security Income benefit for an individual living alone.
- You must be a first-time homeowner.
- You must complete the required homeownership and housing counseling program.
Federal Housing Administration
The Federal Housing Administration (FHA) is a subsidiary of HUD that provides mortgage insurance on home loans for disabled from approved lenders. Use HUD’s tool
to find an approved lender in your area..
An FHA loan from an approved lender is generally less expensive than a regular home loan because it is backed by the US government. For this reason, it may be a good option for someone with a disability who has limited income.
The Federal National Mortgage Association (Fannie Mae) is a government-sponsored company. Its Community HomeChoice program is available in all states and offers the following housing aid for people with disabilities:
- Low down payment programs
- __ Mortgage-qualification aid__ such as lower debt-to-income requirements
- Lenient credit evaluations
- The ability to include rent payments from boarders in income calculations
USDA Single-Family Housing Direct Home Loans
The US Department of Agriculture and Rural Development offers special subsidized housing for low-income households. You don’t need a down payment and your interest rate can be as low as 1%, given you are:
- Unable to find safe, sanitary housing
- Unable to get an affordable mortgage
- A citizen or eligible non-citizen
- Not barred from federal loan programs
- Not over the income limit for your area
These disability benefits can help any borrower create tailored accommodations for their circumstances.
VA Home Loans for Disabled Veterans
Disabled veterans have a multitude of housing benefits. You may be eligible for grants and other VA loan options to help make your home accessible, including The Specially Adapted Housing (SAH) Grant
and Special Housing Adaptation (SHA) Grant. In addition, if your disability is service-related, the following rules apply:
- There is no minimum time you must serve before being eligible for a VA home loan.
- You may be exempt from funding fees from a VA loan.
Help from State Agencies
Many states offer additional home-financing assistance and financial aid especially for people with disabilities. Some examples include:
- Maryland’s Homeownership for Individuals with Disabilities Program
- Connecticut’s Home of Your Own Program
- Disability and property tax exemptions for residents of Alabama
to view the benefits available in your state.
Non-Profit Homeownership Programs for People with Disabilities
While there are many federally-backed programs to help you find affordable housing, many non-profit organizations have stepped in to offer additional assistance. Here are just a few ways to find housing help outside of the government.
Habitat for Humanity
Habitat for Humanity offers affordable housing to lower-income individuals and families, which may include those with disabilities. There are hundreds of locations all over the U.S. Find one near you by entering your zip code here
Here are some things to keep in mind for eligible borrowers when applying for a Habitat home:
- You must demonstrate a need for safe, affordable housing.
- You must participate in “sweat equity,” or be actively involved in the building of your home. This could include manual labor, homeownership classes, or volunteering.
- You must be able and willing to pay an affordable mortgage, which will in turn help build more Habitat houses for others in need.
Rebuilding Together AmeriCorps
Rebuilding Together works with companies like Lowes and Sherwin Williams to offer home repairs and modifications for families with one or more disabled members. They offer a safety checklist
to ensure all the right home features are present for someone who had a disability discharge or other families with disabilities. Rebuilding Together helps families in 39 states, so visit their list of locations to find an affiliate near you.
Homes for Our Troops
Homes for Our Troops offers mortgage-free homes for disabled veteran members who were wounded in overseas combat after September 11th, 2001. To qualify, you must:
- Be retired or be in the process of retiring
- Pass a criminal and credit background check
- Receive a letter of eligibility from the VA Specially Adapted Housing Program
To apply, complete an online inquiry form at https://www.hfotusa.org/inquiry
Knowing and Understanding Your Rights
When it comes to securing home loans for people on disability, there are laws and regulations put into place to protect these individuals. It’s important to know the rights that protect both renters and buyers from discrimination.
Remember that if you suspect you are experiencing discrimination based on a disability, you can file a complaint.
Here’s who to contact:
Office of Compliance and Disability Rights Division
Office of Fair Housing and Equal Opportunity
U.S. Department of Housing and Urban Development
451 7th St., S.W., Room 5242
Washington, DC 20410
Phone: (800) 669-9777
TTY: (800) 927-9275
The Fair Housing Act
The Fair Housing Act was amended in 1988 and legally prohibits the following:
- Refusal to sell or rent to any person on the basis of race, religion, gender, disability, familial status, or national origin
- Discrimination based on race, religion, gender, disability, familial status, or national origin related to privileges or conditions of the rental or sale of a dwelling
- Advertising the sale or rental of a dwelling indicating preference or limitation based on race, religion, gender, disability, familial status, or national origin
- Threatening or interfering with a person’s exercising their housing rights based on discrimination
- Retaliating against an organization that encourages exercising these rights
The Fair Housing Act allows you the right to request reasonable accommodations that allow you to fully enjoy your housing. For example, if you are in a wheelchair, reasonable accommodations for an apartment may include a lower mailbox or an assigned parking spot.
A landlord or housing provider may be able to refuse these requests if they create undue financial or administrative burden. If this is the case, there are many grants available to help pay for these accommodations.
Reasonable accommodations also include service animals. This means that a landlord with a strict “no pets” policy may be required to grant an exception for someone who is visually impaired and has a guide dog.
Living with a disability can pose many challenges, but that doesn’t have to stop you from living in a great home. You don’t have to tank your credit score or drain your savings, either. Simply taking the time to know your mortgage options or other disability loans and legal rights will set you up to buy your dream home at an affordable cost.
Sources: The Simple Dollar
| The Mortgage Reports
| US Department of Labor
| Centers for Disease Control and Prevention
| Americans with Disabilities Act
About the author
Jeff Smith is VP of SEO and Content at Self. See Jeff on LinkedIn
About the reviewer
Lauren Bringle is an Accredited Financial Counselor®
and Content Marketing Manager with Self Financial – a financial technology company with a mission to help people build credit and savings. See Lauren on Linkedin