If you retired early because of a disability, you may be asking yourself: “Will my disability benefits change when I turn 65?” Although disabled retirees may have limited income, a satisfying retirement is still within reach. There are several options for buying a house on disability benefits and you may even be able to find grants to simplify the process. Knowledge is power when it comes to planning for retirement, and we’re here to help with answers to your most pressing questions about retiring with a disability.
Will My Disability Benefits Change When I Turn 65?
Typically, social security disability insurance (SSDI) will not change at age 65. Retirement age is between 66 and 67 for most people, which is when disability benefits automatically change to retirement benefits. However, retirement benefits are the same amount as disability benefits. If you have been receiving disability benefits for less than two years, age 65 marks the point when you can enroll in a Medicare plan and seek eligibility for Medicaid.
Can I Use Disability Benefits to Buy a Home?
Yes! SSDI and SSI (Supplemental Security Income) are reliable sources of income that can be considered on a mortgage application. You can also use long-term disability income from an employer or insurer as qualifying income for a mortgage loan. Like all other types of income, disability income must be properly documented and you must be able to verify that your disability income will continue for at least three years.
Disability income is allowed under all the major home loan programs, including conforming, FHA, VA, and USDA mortgages. However, mortgage lenders set their lending guidelines. This means they may choose not to accept certain types of income. You may need to check with multiple lenders for approval with disability income.
Can I Get Help Buying a Home?
Retirees with a disability often start retirement with fewer assets, which can make it difficult to save enough money to buy a house. Luckily, there are grant programs that can help. Many states, counties, and cities offer down payment assistance programs offering grants and other types of assistance for people who meet specific income qualifications. The Department of Housing and Urban Development’s list of local home-buying programs is a great place to get started looking for an assistance program.
Military veterans may be eligible for special housing grants provided by the U.S. Department of Veterans Affairs. Retirees may be eligible for VA grants if they have a qualifying service-connected disability and own or will own the home.
The U.S. Department of Housing and Urban Development (HUD) offers a housing program for homebuyers that provides housing assistance to disabled buyers who meet eligibility requirements. The program (the Housing Choice Voucher Homeownership Program) provides vouchers to eligible buyers so they can purchase a home and receive monthly assistance in meeting homeownership expenses.
Will My Disability Prevent Me From Getting a Home?
The Fair Housing Act (FHA) protects people with disabilities from discrimination when they are renting or buying a home, getting a mortgage, or seeking housing assistance. The FHA covers most housing and mortgage lending qualifications.
The FHA prohibits specific discriminatory actions from sellers and mortgage lenders, including:
- Refusal to rent or sell housing
- Refusal to negotiate for housing
- Otherwise make housing unavailable
- Set different terms and conditions for sale or rental of a dwelling
- Falsely deny that housing is available for inspection, sale, or rental
- Make notice that indicates preference, limitation, or discrimination with respect to a sale
- Impose different sales prices
- Evict a tenant based on a disability
- Fail or delay maintenance or repairs
- Discourage the purchase or rental of a dwelling
- Refuse to make a mortgage loan or provide financial assistance
- Refuse to provide information regarding loans
- Retaliate against a person who has filed a fair housing complaint
Housing providers must make reasonable accommodations and allow reasonable modifications that may be necessary for people with disabilities. However, homebuyers are required to pay for the modifications. Consider the modifications you’ll need when buying a home and factor these costs into your budget.
What Are the Best Home Loans for Seniors on Social Security?
Many seniors believe that reliance on Social Security as a primary source of income will prevent them from getting a mortgage loan. However, you can find home loans designed to meet your unique financial needs with Social Security income. Since SSI is considered reliable income, you can buy a home or refinance based on your Social Security income. As with all mortgage seekers, lenders will evaluate your loan-to-value ratio, income, assets, debt-to-income ratio, and credit score.
- Conventional Loans: Fannie Mae and Freddie Mac have senior home-buying programs that allow retirement assets to be used to qualify for a mortgage. To qualify, you’ll likely need a good credit score, proof that disability income will continue for at least three years, and proof that assets are entirely accessible.
- Government Home Loans: FHA loans, VA loans, and USDA loans allow Social Security income to be considered for eligibility. Government loans often have lower down payment requirements (or none) and less stringent credit score requirements. There are certain eligibility requirements for government loans, so it’s important to do your research and determine if you meet the qualifying factors.
- Bank Statement Loans: These loans consider non-traditional income sources, including SSI, income from investments, rental properties, and retirement accounts. Bank statement loans are a good option for seniors relying on varied income sources. It’s important to note that not all lenders offer bank statement loans and interest rates and down payment requirements are typically larger.
Finding an Affordable Home in a 55+ Community
Retiring early due to a disability doesn’t mean you have to give up on your dream for your golden years. There are many programs and laws to ensure that seniors with reliable income have access to comfortable housing. Researching loans that consider disability income and grants to assist disabled homebuyers can help you find a home within your budget. Considering a home in a 55+ community is another great way to find an affordable home in your ideal retirement destination. Visit 55places.com to find your ideal retirement community and a home that matches your budget.
