How to Get a Home Loan on Disability Income

If you receive disability income, there's a good chance that you can use your benefits to qualify for a mortgage loan. Lenders accept several different types of disability income, and some programs are designed specifically for borrowers with low to moderate incomes.

Before you get started, it's important to know which benefits count, what paperwork you'll need to provide, and other steps you can take to increase your approval odds.

Can you get a mortgage on disability income?

When it comes to income on a mortgage application, what matters isn't necessarily where it's coming from, but whether it's stable and likely to keep coming.

Many forms of disability income clear that bar, and some also come with an added upside other forms of income don't. If your disability benefits are nontaxable, lenders can gross up the income by 25% to reflect its pre-tax equivalent. So, if you receive $2,000 in monthly tax-free income, the lender may treat you as if you receive $2,500 instead.

What types of disability income qualify for a mortgage?

Disability benefits can typically count as long as you can document them and show that they'll continue for at least three years. That said, not every form of disability is treated the same way.

Social Security Disability Insurance (SSDI)

You may qualify for SSDI if you have a disability that prevents you from doing substantial work and is expected to last at least 12 months. You’ll also need enough work credits, generally five of the last 10 years, though that requirement is lower for younger recipients. Benefits may be taxable, depending on your overall income and filing status.

Supplemental Security Income (SSI)

Unlike SSDI, SSI is needs-based rather than work-based — you don’t need a work history to qualify, but your income and resources must fall below strict limits. You may be eligible if your disability is expected to last more than a year or result in death. Benefits are not taxable.

VA disability benefits

You may receive these tax-free benefits if you're a veteran who got sick or injured while serving in the military, or if your service made an existing condition worse. That includes both physical and mental health conditions.

Long-term disability (LTD) insurance

You may receive LTD insurance if a serious injury or illness keeps you from working either your own job or any job (depending on the plan) for an extended period. Unlike government benefits, LTD payments come from an employer or private insurance plan. Your benefits are tax-free to the extent you paid the plan premiums with after-tax dollars. If your employer paid or you paid pre-tax, benefits are taxable.

Workers' compensation insurance

You may be eligible for workers' comp if you were injured at work or develop an occupational disease. Payments are tax-free when paid under a workers’ compensation act. Note that lenders often need documentation showing income will last for at least three years to count it as income.

Documentation lenders typically require

Because some disability benefits are short term, lenders will want to confirm that your income will continue for at least three years to qualify as income.

Depending on the type of income you receive, you may need to provide your lender with:

• Bank statements showing recent payments
• Copies of your disability policy or benefits statement
• Social Security Administration (SSA) award letter
• SSA-1099 Social Security Benefit Statement
• Recent federal income tax returns or transcripts

The law prevents lenders from asking about the nature of your disability or requiring a note from your doctor. If you're asked to provide either, file a complaint with the CFPB at or report housing discrimination to HUD.

‍Know your rights. Lenders can ask you to document that your income will continue. They cannot ask about the nature of your disability or require a note from your doctor. If you're asked for either, you can file a complaint with the CFPB.

Mortgage options for borrowers on disability income

You're not limited to certain mortgage programs if you're living on disability income, though some loan types might better suit your situation, particularly if you're on a fixed income.

FHA loans

Backed by the Federal Housing Administration, FHA loans are popular among homebuyers who have limited savings or lower credit scores. You put down as little as 3.5% with a credit score of 580 or higher, or as little as 10% with a score as low as 500.

FHA loans require an upfront and annual mortgage insurance premium (MIP), with many loans requiring lifetime MIP payments.

VA loans

Backed by the U.S. Department of Veterans Affairs, VA loans require no down payment and no mortgage insurance. There is an upfront funding fee that may be waived if you have a service-connected disability. You can't qualify if you're not an eligible member of the military community.

The VA sets no minimum credit score, which means a veteran turned down by one lender might be approved by another. Based on our research, minimums tend to range from mid-500s to about 640, depending on the lender.

USDA loans

USDA loan programs are designed for lower-income borrowers looking to buy in eligible rural and even some suburban areas, backed or issued directly by the U.S. Department of Agriculture. They don't require a down payment, but some do come with an upfront and annual guarantee fee that you can't drop.

USDA doesn’t set a hard minimum credit score, but at 640 or higher, you’re eligible for USDA’s automated underwriting system, which offers a more streamlined homebuying process. Below 640, you could face more paperwork and longer turnaround.

Approval below 640 is possible with a low debt-to-income ratio, stable employment, or a strong payment history.

Conventional loans

Unlike other loans in this list, conventional loans have no government backing. However, some private lenders offer down payments as low as 3%, and you may even qualify for down payment assistance.

That said, loans without a down payment of 20% or more often require private mortgage insurance. And the minimum credit score to qualify can be around 620, depending on the lender.

Run the numbers >> See what you can afford based on your income and debts with Kikoff's affordability calculator

Tips for strengthening your mortgage application on disability income

Even if your income qualifies you for a mortgage, your loan options and terms depend on factors that include your credit history, savings, and debt.

These five tips can better position your application for approval:

• Maintain a strong credit history. Prioritize making on-time payments and keeping your credit utilization low to show lenders you can manage different types of credit — and potentially minimize credit applications.
• Lower your debt-to-income ratio (DTI). Your DTI shows how much of your monthly income before taxes goes toward debt payments. Keep it low by paying off smaller loans and credit card balances, or by increasing your income.
• Save for a larger down payment. Look for opportunities to set aside more cash for a down payment, even if the program you're applying for doesn't require one.
• Get pre-approved before house hunting. A mortgage pre-approval shows sellers you're a serious buyer. It also gives you a clear budget, so you can avoid shopping outside what you can comfortably afford.

Know your rights as a borrower on disability income

When you apply for a mortgage loan with disability income, several federal protections apply, including those under the Equal Credit Opportunity Act, the Fair Housing Act, and HUD requirements.

Lenders are not allowed to:

• Deny your application because your income includes disability benefits or other public assistance.
• Otherwise discriminate against you because of your disability.
• Ask about the nature of your disability or require medical documentation.

Agency and investor guidelines generally direct lenders to treat disability income as likely to continue when your benefits letter shows no expiration date within three years.

If you believe a lender has treated you unfairly, file a complaint with the CFPB.

Bottom line

Mortgage lenders accept many different types of disability income, and a handful of mortgage programs are designed to streamline the process for those on fixed incomes to get into a home. That said, your income is just one piece of the application puzzle. It's also important to show you can manage your other debt well.

Credit history is how you demonstrate that. Kikoff's Credit Account reports your on-time payments to all three credit bureaus, no hard credit check required.