Financing a Home Purchase With a Disability: Where to Look

There’s a lot of talk today about affordable homes. But we also need more accessible affordable homes. More than one in four U.S. residents live with a disability. And the U.S. population is getting older.

If you’re an individual with a disability, there are agencies and alliances that have your back. And yes, you can buy a home. Programs exist to help you buy a home that’s comfortable, accessible, and geared to what you need. Loan programs and grants help people with disabilities get mortgages to suit their budgets.

Here, we explore some tools you might want to know about.

Looking for the Most Popular Loans?

Mortgages backed by Fannie Mae and Freddie Mac are still the most popular. Fannie Mae’s HomeReady helps people with disabilities connect with affordable financing. Freddie Mac has Home Possible. Both offer the possibility of paying just 3% down. And they offer credits for low-income applicants. According to Rocket Mortgage:

• Freddie Mac Home Possible®: This one lets you put just 3% down. To be eligible, your income cannot be more than 80% of the area’s median.

• Fannie Mae HomeReady®: Designed for applicants with modest incomes, this one also lets you put just 3% down.

At the time of this writing, these programs provide a $2,500 credit for closing costs or down payment funds for low-income, first-time buyers.  

Looking for a Government-Backed Loan?

You might wish to consider applying for an FHA mortgage. The Federal Housing Administration backs loans for people with relatively low credit scores—580 or higher. Buyers put at least 3.5% down. It’s possible to get a loan with a lower score if the buyer can put more money down—ten percent or more.

FHA loans are often the way to go, for those whose credit profiles or income amounts could rule out loans backed by Fannie or Freddie. These government-backed loans do count disability income for loan approvals.

And don’t overlook the Housing Choice Voucher homeownership program. This federal initiative can help people with disabilities get home loans. In fact, it’s helped many renters with disabilities acquire deeds and handle housing costs. First-time home buyers with modest incomes should look into HCVs.

Are You a Disabled Veteran?

The Department of Veterans Affairs (“the VA”) offers home loan programs that require very little investment up front. The VA does home purchase and home modification grants, too. These help veterans with disabilities buy a home or modify it for accessibility. Government grants need not be repaid.

There are some home-purchase grants for parents of a disabled individual. Do check the Temporary Residence Adaptation initiative.

Also, you might look into Homes for Our Troops. This organization donates homes that have been modified to accommodate younger veterans with especially serious injuries.

Live Outside the City?

You might be surprised how much territory USDA loan opportunities cover.  Loans backed by the federal Agriculture Department can benefit seniors and people with disabilities. USDA loans offer affordable, no-money-down loans for eligible deed seekers with disability income. Check this state USDA loan coverage lookup tool.

USDA offers homeowners of modest incomes housing repair grants, too. Here again, the USDA offers grants for parents of someone who is disabled to buy homes.

Checked Your State?

States offer down payment assistance programs. These can make things easier for hopeful buyers with disabilities. Consider Pennsylvania. The Pennsylvania Housing Finance Agency (PHFA) provides 30-year, fixed-rate mortgages to buyers who have disabilities or whose household member does.

Funding can make accessibility possible to carry out, through forgivable loans. A good example of state-based support is the ACCESS Home Modification Program. It produces mortgages to help people living with disabilities “or who have a family member(s) living in the household with disabilities who are purchasing a home that needs accessibility modifications.”

Generally these programs are built for households with income at or under 80% of the state’s median income. First-time buyers may get up to $10K (the total available is based on income) in an interest-free loan through the HOMEstead Program. This can bring a home purchase within reach.

PHFA points to lenders and brokers you could use. Then it buys out the loan and services it for you. Check your own state for similar options.

Checked Your City?

Consider, as an example, Philadelphia’s Adaptive Modifications Program. It’s supported by the city’s Housing and Community Development office. Qualifying deed holders can use this one to make upgrades necessary to assist with a permanent physical disability.

And Pittsburgh’s guide to home modification resources includes information about a grant of up to $15K to make your home accessible.

There are income caps.

Thought About Nonprofits?

Thanks to a few good nonprofits, people with disabilities can become people with deeds. Parents and caregivers, too, can apply for grant money for down payments, closing costs, or home modifications.

Habitat for Humanity is perhaps the most well-known. It works with volunteers to build reasonably priced homes that meet the needs of the future homeowner.

Plenty of smaller nonprofits exist across the country, too. They have programs for people with disabilities, and their households and caregivers. Criteria and funding amounts vary. Check the offerings in your area.

Concerned About Your Rights?

The Fair Housing Act bars discrimination based on disability—whether you’re renting or seeking a deed. It also requires that buildings (homes included) be accessible, since 1991.

Federal and state laws keep lending companies from treating applications differently because of disability or age.

Homeowners’ association (HOAs) can’t set any rules they like. If you buy into a condo property, you do have a legal right to make reasonable home modifications. Refer to the Americans With Disabilities Act. This law also promises you reasonable accommodations for sidewalks, gyms, pools, and other common areas managed by the HOA.

How to Get Oriented

Call several mortgage professionals and real estate agents. Put a team together that understands what you’re setting out to do. Disability legal services, if needed, can offer case-specific guidance.

You won’t be pressed to disclose your disability—just your disability income. SSDI benefits (and SSI, for those over age 65) are accepted by most lenders as reliable income for home loans.

The program that’ll work best will depend on your own situation. Your credit history and the assets you have will affect your path, along with your goals and preferences. To explore more possible paths, look up the National Council on Disability. It links people to support for medical care, financial help, and housing.