What is home loan?

A home loan provides financing to help you purchase your dream home comfortably. Lenders cover up to 75-90% of the cost of the home and you must make an initial payment (down payment) amounting to the remainder. Home loans offer ample funds at economical interest rates and have long repayment tenors.

A home loan is a secured loan that is obtained to purchase a property by offering it as collateral. Home loans offer high-value funding at economical interest rates and for long tenors. They are repaid through EMIs. After repayment, the property’s title is transferred back to the borrower.

The American dream of buying a home does not have an asterisk.

Sadly though, many of the 54 million Americans who live with disabilities do not own their own home, which means they do not enjoy the benefits of their own space and place.

The challenges to find that home is real. The disabled must find spaces that fit their needs. If they are receiving Social Security Disability Insurance or Supplemental Benefits, they must wander the maze of government regulations to find home loans for disabled.

And then there are financial challenges; one in three disabled lives at or below the poverty line.

However, with attention to detail and proper financial planning, those with disabilities can find the loan that allows them to buy their home.

Federal laws are written to ensure the disabled have fair access to home loans, and are not discriminated against. Financial wherewithal is needed to afford the mortgage; with some loans so is proof of disability. Some federal agencies offer programs to help, and non-profit private organizations have programs specifically to help the disabled, veterans or the homeless.https://youtu.be/eeWIf3DOWzI

Purchasing a Home

Any homebuyer goes through similar steps when buying a home. While it may seem complex when you begin taking the steps for your first purchase, the process does not have to be daunting. The starting point is knowing your credit score and budgeting what you can afford.

The credit score will reflect your ability to repay a loan; the higher the score, the easier you’ll be approved because it’s more likely you will repay the loan. l Those with the highest credit scores qualify for a lower interest rate, and in early 2021 rates already are at attractively low levels.

Budgeting to know what you can afford is vital. The first step would be to create a budget that lists regular expenses, and how much  you might expect to pay with a home payment that includes loan principal, interest, taxes and insurance. A mortgage calculator is a big help here.

Once you have a budget, consider being pre-approved for a mortgage. That tells a seller what you can afford, and that you are serious about buying. Study loan rates in your area and closing costs to determine the best loan for you before applying. Consider how much money you may have for a down payment; typically, those who can put down 20% of the purchase price avoid the added monthly cost of private mortgage insurance.

Can You Buy A House while on Disability Income?

The answer to one of the key questions asked by the disabled is yes, you can buy a home while on disability income.

Social Security Disability Income (SSDI) is paid to individuals younger than 65 as a result of being disabled. This money can be used to purchase a home as long as the buyer’s credit score allows for the loan. The challenge a buyer faces, though, is the uncertainty about how long the SSDI income will continue. SSDI requires regular reviews to ensure the income benefit is warranted.

Supplemental Security Income (SSI) benefits are paid to those over 65 or those who are blind or disabled with little income. These funds can be considered by lenders when applying for the loan to buy a home, but there are practical hurdles in the process. For one, those who qualify for SSI generally do not have a lot of income. In addition, SSI limits the assets one can have to receive the money. To qualify, one must not have individual assets worth more than $2,000, or $3,000 if married. Though not all assets count toward this number, those receiving SSI  usually are limited financially and find it difficult to come up with the money for a down payment.

Long-term disability from an employer also can be included on a loan application. But each lender makes its rules, and some may disqualify you for the loan based on income type. Researching loans before applying can help, but if a lender says no, that should not stop you from looking elsewhere.

Understanding Your Rights

Federal law requires equal housing opportunities. Knowing your rights before proceeding can avoid a problem later. For instance, if you buy a home in a community that has a homeowners association, the law allows you to make “reasonable accommodations” (a ramp at the entrance, accessible parking, etc.) to your residence that take precedence over guidelines or policies of the HOA.

Other laws all disabled individuals should be aware of include:

  1. The Equal Credit Opportunity Act (ECOA): Ensures protected classes, including the disabled, do not face discrimination when applying for a mortgage. The Federal Trade Commission (FTC) lists important information on mortgage discrimination
  2. Section 504 of the Rehabilitation Act of 1973: This law makes sure everyone has the same access to financial help from HUD

Mortgage & Loan Programs for People with Disabilities

Choosing the right mortgage could be the most important step in the home-buying process. One can select from many different types or mortgage programs.

Federal government options include:

  • Fannie Mae. This government organization (along with Freddie Mac) backs most of the country’s home loans. Obtaining a home loan backed by Fannie Mae can be a big help to those who cannot afford to put down a sizeable down payment. The HomeReady Mortgage from Fannie Mae requires only a 3% down payment – which is $4,500 if the house costs $150,000. Grants, including disability home loans grants, can be used to pay the entire down payment. Non-occupant co-buyers also could qualify for the loan, which means a family member or close friend willing to offer their credit and financial history can help secure the loan. Fannie Mae also can be a help to parents buying a home for a disabled child.
  • The VA. Veterans with a disability can pursue a number of Veterans Administration programs or loans that can help. A very attractive option is the VA Loan program, which does not require a down payment and offers low rates. Disability income can be used on the application, and the loan funding fee is waived. Other ways the VA can help include grants for disabled homeowners (which do not need to be repaid) to adapt the house to the disability and a temporary residence adaptation grant when an individual is living with a relative.
  • The USDA. The U.S. Department of Agriculture offers two major programs that can help. The Housing Guaranteed Loan Program offers loans to low-income applicants who live in eligible rural communities. The Housing Repair Loans and Grants provides money to repair, modernize and make safe homes of those with low incomes. Typically USDA home loans require a credit score of 640 or higher, and that the home be in a USDA-approved rural area. Applications must be made through the local Rural Development Office.
  • HUD housing choice vouchers. These vouchers go to first-time buyers who have completed the Public Housing Agencies counselling program. These Section 8 vouchers can help pay the mortgage but are available only to those who qualify or would have qualified for HUD rental assistance. Applications must be placed through the local Public Covering Agency, but not all local agencies participate, and those that do may have lengthy wait times.

Conclusion:– If you’re facing eviction due to the financial strain of the coronavirus pandemic, the good news is help is on the way.

The bad news is it might not arrive in time to keep the current roof over your head.

Eviction moratoriums are expiring, and the government has sprung into action in typical governmental style – lumbering and confused.

Congress has allocated $46.5 billion for rent assistance, but most of the “emergency” money is clogged in bureaucratic channels. That means unwanted suspense for millions of cash-strapped Americans.

About one in seven renters were behind on payments in March of 2021, according to a U.S. Census Bureau survey. But if you’re one of them, do not completely despair. There are things you can do that might keep you in your home while waiting for the government to get its act together.

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