Homeownership

Homeownership is possible for people with disabilities, even if you get benefits that have a resource limit. You might worry about the commitment and responsibility of homeownership, but owning a home can help build your wealth, give you tax advantages, and let you be more independent. Of course, it’s easier to buy a home if you have more money, but there are options for almost everyone if you are focused, patient, and willing to compromise.

Making Homeownership Possible

The key steps for being able to buy a home are:

• Building the right team (with a realtor, mortgage broker, and others)
• Saving up money
• Managing your debts (the money you owe)
• Tapping into special programs
• Being flexible

Both Supplemental Security Income (SSI) and Medicaid let people getting those benefits own their own homes, because they don’t count the home you own and live in as part of the resource limit. And you may be able to get help buying a home through first-time buyer programs or Section 8 homeownership vouchers.

The Down Payment

Homes can be expensive, so most people make a down payment (a percentage of the total cost) and take out a real estate loan known as a mortgage to pay the rest. Down payments are typically 10% to 20% of the total price, but there are ways you can buy a home with a lower down payment, or no down payment at all.

It can take determination, hard work, living within your means, and coming up with a plan to save for a down payment. If you have a disability and rely on benefits, ABLE accounts or Plans to Achieve Self-Support (PASS) can help you save money or make investments without risking your public benefits. Special Needs Trusts are another way to build up assets without losing disability benefits. And tax credits, such as the Earned Income Tax Credit (EITC), can help you make the most of your income. Learn more in DB101’s article on Building Your Assets and Wealth.

To figure out how you can save money, use this worksheet to create your saving rules to live by.

Your Mortgage

There are three main options to get a mortgage:

• Conventional loans: Offered by banks and mortgage lenders, these typically require the borrower to make a down payment of at least 10%.
• Federal Housing Administration (FHA) loan: Also offered by banks and mortgage lenders, these are insured by the federal government. These allow a smaller down payment — usually 3.5% of the purchase price — and are typically available for people with lower credit scores.
  • 208 loans: These are a type of FHA loan for people with disabilities that let you take out a mortgage that is more than the home’s value — up to 120% — to make accessibility modifications to the home after you buy it.
• VA loans: Department of Veterans Affairs (VA) loans are only available to military veterans, and sometimes do not require you to make a down payment.

However you get your mortgage, it’s important to understand the interest rate and type of loan:

• Fixed rate loans: The interest rate is set when you take out the loan and will not change. This is generally considered the best type of mortgage.
• Adjustable-rate mortgage (ARM) loan: The interest rate can go up or down. Many start at a lower interest rate than a fixed rate mortgage, but after the introductory period ends, you can end up paying more each month.

Learn more about fixed-rate and adjustable-rate mortgages.

Other Costs

In addition to the down payment and your monthly mortgage payment, there are other costs you need to keep in mind:

• One-time closing costs: Home-buying costs not included in your purchase price, like an appraisal (to set the market value), a home inspection (to determine the condition of the home), loan fees, title and escrow fees, and taxes. These are usually about 2% to 4% of the price of the home, and are paid by the buyer (you).
• Upfront money: Lenders may give you extra money to pay for things like closing costs, a moving truck, or remodeling to make the home more accessible, but you usually pay a higher interest rate. This costs more money in the long term, but your monthly payments don’t go up by much.
• Mortgage insurance: With a low down payment, you might be required to buy insurance to protect your lender if you can’t make your mortgage payments.
• Yearly property taxes: When you own your home, you must pay property taxes every year. The cost varies from state to state and town to town.
• Homeowners insurance: Your lender might make you prove each year that you have insurance covering damage to your home, property, personal belongings, and other assets in your home.
• Homeowners association fees: If you buy in a planned community, there can be monthly fees for things like maintenance on common areas, or extras like a gym or swimming pool. These fees can sometimes be quite high.

Your Realtor

The most important member of your home-buying team is your realtor, who guides you through the steps and details of buying a home. Your realtor should:

• Know about first-time buyer programs
• Connect you with an appropriate lender or loan program
• Help you find the right home
• Locate contractors who can fix up the home if necessary
• Be available after you move in, if needed

For people with disabilities, a realtor should also:

• Be sensitive and responsive to your specific situation and needs
• Understand how your disability impacts your ability to think about and decide on a property, both physically and mentally
• Know about specific financing opportunities for people with disabilities and low incomes
• Know contractors who can make accessibility modifications

The realtor should preview properties and help figure out how accessible they are before showing them to you. You need to clearly communicate your specific needs to the realtor. Remember, you are the customer and the realtor is working for you.

An Independent Living Center or other local disability organization can help you find realtors who specialize in helping people with disabilities buy their first homes.

Section 8 Homeownership

If you currently get help from the U.S. Department of Housing and Urban Development (HUD) Section 8 Housing Choice Voucher program, you might be able to use your Section 8 Voucher to buy a home. In some cases, Section 8 may pay the down payment.

With a Homeownership Voucher, HUD pays the same monthly amount it was paying for your rent, but instead of paying your landlord, HUD pays your lender. The amount HUD pays is usually less than your monthly mortgage payment, so you pay the rest to your lender. When your mortgage is paid off, you own the home and the government is no longer involved.

It takes time and work to get on the voucher program. The process from start to finish can take years. It can also be difficult to find a desirable home, given the size of the voucher. Learn more about the HUD Homeownership program.

Homeownership Resources

Learn more about the steps you need to take to own your own home.

• The Benjamin Rose Institute on Aging offers free Homebuyer Education classes.
• The Consumer Financial Protection Bureau has Tools and resources for homebuyers.
• Breaking Chains Inc. offers free Homebuyers Education Seminars.
• America Saves explains how to save for homeownership.
• The World Institute on Disability offers an interactive online course on Homeownership (free account registration required).