How To Buy A Home If You Have Disabilities

The Americans with Disabilities Act (ADA) affirmed the “equality of opportunity, full participation, independent living and economic self-sufficiency” of individuals with disabilities.

Roughly 27% of American adults currently live with a disability, according to the CDC. Like many Americans, those with a disability also aspire to homeownership, yet the path can often be challenging for individuals who experience physical and mental limitations.

For one, there are financial hurdles. Individuals with a disability often have to designate a large portion of limited income toward a broad range of expenses related to their disability, making it hard for some homebuyers with disabilities to meet mortgage lender qualifications.

Finding an accessible home can also prove to be an immense challenge, especially with housing supply hovering near record lows. The costs of modifying a home can be prohibitive as well. And despite laws protecting against discrimination, people with disabilities still experience bias.

However, for people with disabilities, potential obstacles don’t have to put homeownership out of reach. Thanks to financial assistance programs, multiple loan types and avenues for seeking redress against suspected discrimination, these individuals have opportunities to unlock the door to their dream home.

9 Steps To Buy a Home If You Have Disabilities

To start the homebuying process, every homebuyer—including people with disabilities—should assess their financial situation and what they can afford.

Additionally, if you’re an aspiring homeowner, review your credit score and look into ways to lower your debt-to-income (DTI) ratio—how much of your income goes toward paying off debt every month. Improving your credit score and DTI will put you in a stronger position to qualify for a mortgage and receive competitive interest rates.

Follow these general steps to make the best possible home purchase:

1. Seek external help. First, ask for guidance from a housing counselor or mortgage advisor who specializes in working with people with disabilities. These experts can assess your financial situation, explore suitable mortgage options and help you navigate the homebuying process.
2. Find a licensed realtor. As you prepare to shop for homes, see if you can connect with a licensed realtor experienced in serving individuals with disabilities. They may be able to help you shop more efficiently by identifying properties that meet your accessibility requirements.
3. Obtain a preapproval letter. Getting preapproved by a mortgage lender gives you a sense of how much home you can afford and shows sellers that you’re a serious buyer.
4. Shop for homes in communities that meet your criteria. When looking at homes, pay attention to accessibility features and modifications. Proximity to public transportation may be important to note as well.
5. Put in an offer. Once you’ve found a home and mortgage lender you love, negotiate and put in an offer. Submit a mortgage application with your lender, and be sure to provide all the required documentation to support your loan request.
6. Consider other programs and grants. If applicable, apply for down payment assistance programs or renovation grants. Your housing counselor or mortgage lender can guide you through this process.
7. Get the home appraised. Before the underwriting process begins, your lender will arrange for a home appraisal. This usually costs several hundred dollars and helps give lenders an idea of how much the property is worth.
8. Complete all necessary inspections and a final walk-through. Pay special attention to areas related to accessibility and modifications during this time. Ensure the property meets your needs.
9. Close. Finalize paperwork and financial transactions to close on your loan and take ownership of the property. Get ready to sign several documents, but it’ll all be worth it in the end when you receive the keys to your new home.

Down Payment Strategies and Best Loan Types

Neha Gharpande, a real estate professional with Elite Properties based in Brooklyn, New York has first-hand knowledge of what it’s like to live with a disability and the unique challenges it can present when buying a home. Gharpande has a visual impairment that has impacted her vision since birth.

“Helping clients with disabilities find their dream homes has been a rewarding aspect of my professional journey,” she says.

Gharpande says that a couple of the biggest hurdles that aspiring homeowners with disabilities face are possessing the financial resources for a down payment and qualifying for a mortgage.

“Saving for a down payment can be challenging, particularly if your disability affects your income or limits employment opportunities,” Gharpande says. Qualifying for a mortgage can be especially difficult for those earning low or irregular income “as traditional lenders may not consider disability benefits or alternative income sources,” she adds.

Gharpande notes that additional expenses related to a disability, such as medical equipment or modifications, can strain finances and impact mortgage affordability as well.

How Persons With Disabilities Can Fund a Down Payment

Despite the financial challenges some people with disabilities may face, there are ways to set yourself up for success as you begin to prepare your homebuying strategy.

One of these strategies is to consider all your options for putting together a down payment if you’re on a limited income. For instance, you can:

• Open an ABLE account. The Achieving a Better Life Experience (ABLE) Act of 2014 allows qualified individuals with disabilities to cover certain disability-related expenses using tax-advantaged savings accounts. This includes housing-related expenses like mortgage payments, a down payment, property taxes and home renovations. Individuals with disabilities can save up to $100,000 in an ABLE account without impacting Supplemental Security Income (SSI) benefit limits. Total annual account contributions are capped at $17,000 for the 2023 tax year.
• Sell your current home. If you own a home but need to move to a property that’s more accommodating to your disability, you can sell your home to use your home equity—the current market value of your home minus your remaining mortgage balance—to help fund the down payment.
• Use gift money. A family member can gift up to $16,000 toward a down payment on a home without any tax implications.
• Find one or more qualified co-buyers. If all co-buyers can afford the financing, this can be an affordable option.

There are also some 2,500 down payment assistance programs across the country that provide grants or loans. Check to see what programs are available in the state where you plan to live and if you qualify. Some states offer programs designed specifically for borrowers with disabilities.

Affordable Mortgage and Loan Programs for Borrowers With Disabilities

If you think you won’t have enough money to put down on a conventional mortgage, don’t worry. Chances are you’ll qualify for one of the numerous affordable mortgage and loan programs available to people with disabilities, including:

• Fannie Mae HomeReady loans. For those who receive disability benefits and earn a low to moderate income, this specialized loan program may be a great fit due to its flexible features. For one, you only need to put 3% down, and those funds can come from external sources, such as gifts or grants. The loan also offers special assistance for people with disabilities, such as allowing the applicant to use a non-resident co-borrower.
• FHA loans. Ideal for first-time homebuyers, this government-insured home loan accepts lower credit scores compared to many conventional loans and a down payment as low as 3.5%. Additionally, FHA loans allow borrowers with disabilities to include SSI and Social Security Disability Insurance (SSDI) income on their home loan applications.
• Department of Housing and Urban Development (HUD) Vouchers Program. People already receiving rental assistance vouchers through the Section 8 Housing Choice Voucher (HCV) program may have the option instead to use their housing vouchers towards purchasing and maintaining a home.
• VA loans. If you’re an eligible servicemember or veteran and have a disability due to a service-related injury, you could be eligible for certain VA loan benefits. In addition to not needing a down payment, the program waives the VA funding fee requirement for servicemembers or veterans with a service-connected disability. It also offers Specially Adapted Housing grants for eligible servicemembers or veterans with disabilities to buy or remodel a home to better accommodate their needs.
• Homes for Our Troops. Homes for Our Troops is a nonprofit that constructs specially adapted, mortgage-free homes and donates them to veterans who served after September 11, 2001 and became severely injured while on duty.
• USDA loans. USDA loans allow qualified homebuyers to buy or build a home in an eligible rural area with no down payment. Homebuyers with disabilities with an income that falls below the low-income limit where they wish to purchase a home may also be eligible for a USDA Single Family Housing Direct Home Loan. This loan provides a subsidy that reduces a homeowner’s monthly mortgage payments for a period of time.
• Special Purpose Credit Programs (SPCP). These programs are an initiative under the Equal Credit Opportunity Act that legally allows lenders to promote credit access for historically disadvantaged individuals and communities who may otherwise experience bias related to lending transactions. Consequently, it’s worth asking lenders if they have an established SPCP for which you’d qualify based on your disability status.

Know Your Rights as a Person With Disabilities

Shopping for a home is a daunting enough task for anybody. If you’re a person with a disability you may face extra challenges surrounding discrimination. Thankfully, there are legal protections in place that prohibit discrimination practices during the homebuying process.

Americans With Disabilities Act

The ADA legally mandated eliminating discrimination against people with physical or mental disabilities in areas such as employment, public accommodation and housing. However, it took years of grassroots activism and individual and group advocacy efforts to lead to the legislation.

The first significant legal win in the disability rights movement was the passage of Section 504 of the 1973 Rehabilitation Act, which prohibits organizations and employers receiving federal funding assistance from discriminating against qualified people with disabilities. Section 504 was the precursor for the ADA and the legislation works in association with the ADA to protect all individuals from unequal treatment.

The ADA Amendments Act of 2008 expanded the definition of disability, protecting more individuals with physical and mental impairments under the law, ultimately making it easier for more people with disabilities to win housing discrimination cases.

Among the areas in which ADA law protects people with disabilities is discrimination in public spaces, which includes protecting the ability to buy a home. Consequently, real estate offices must be ADA-compliant, and it’s illegal for lenders to refuse financing to individuals with disabilities. The Office of Fair Housing and Equal Opportunity (FHEO) enforces ADA law.

Fair Housing Act

Though not part of the ADA, the Fair Housing Act of 1968 is also a civil rights law providing legal protections for qualified people with disabilities looking for housing. The law also prohibits discrimination based on race, color, sex, family status and national origin.

All housing transactions fall under the protections of the Fair Housing Act, which protects “individuals with mental or physical impairments that substantially limit one or more major life activities” or those who have a record of such impairments.

The Fair Housing Act makes it unlawful for real estate companies, mortgage lending entities and homeowners insurance companies to deny financing or selling a home unless based on factors related to a person’s financial resources.

Moreover, developers, builders, architects and designers responsible for the construction or design of certain types of new multi-family dwellings must comply with Fair Housing Act accessibility and usability design requirements.

4 Ways To Take Action If You Experience Housing Discrimination

Though bias still exists, discrimination is not always so easy to prove. Here’s what you can do if you experience housing discrimination.

1. Document Interactions With Agents and Lenders

Attorneys advise documenting interactions with real estate agents, lenders and other third parties so you can provide evidence to build a case when preparing a complaint. Be mindful of red flag language or unexplainable roadblocks, such as having your offer denied but then seeing the home is still on the market.

2. File a Federal Complaint

Individuals who believe they’re victims of subtle or obvious discriminatory practices during the homebuying process in association with their disability can file a federal complaint with FHEO online, by email or by mail. They can also contact an FHEO intake specialist by phone or call their regional FHEO office.

3. File a State-Level Complaint

Individuals who feel they have been discriminated against should consider contacting their state or local fair housing center, which can send out testers to gather evidence of home selling or lending discrimination.

Some states allow individuals to file complaints with the state attorney general’s office or with local human rights commissions as well. Filing a complaint with states that have rigorous fair housing laws may yield faster and more effective results compared to going through the process at the federal level

4. File a Complaint With the CFPB

For suspected discrimination related to mortgage lending, in addition to contacting a state’s attorney general’s office, individuals can also file a complaint with the Consumer Finance Protection Bureau (CFPB). Some discrimination warning signs include:

• Refusing a person with disabilities credit who otherwise qualifies
• Discouraging individuals with disabilities from applying
• Offering less favorable credit terms to individuals with disabilities

These actions violate the Equal Credit Opportunity Act, which prohibits lenders and mortgage brokers from discriminating against credit applicants with disabilities.