Does a Disability Affect a Person’s Chances of Getting a Mortgage?

To get a mortgage, a person must meet minimum credit requirements and prove that they have a stable income that’s substantial enough to cover the monthly payment. Though some income forms are not accepted by lenders, it’s usually possible to get a mortgage using long-term or Social Security disability payments.

The ECO Act

The ECO (Equal Credit Opportunity) act is a law that keeps creditors and mortgage lenders from discriminating against borrowers with certain characteristics such as race, gender, marital status or religion. Under the Act, a lender cannot deny a mortgage application solely because the borrower is disabled. Similarly, a lender must regard disability pay in the same way as other types of income, and they can’t exclude it from a mortgage application.

Social Security Disability

A mortgage lender typically includes the complete Social Security disability payment in the borrower’s counted income, as long as they provide bank statements, tax returns, and/or benefit statements that document the amount and frequency of payments. Most mortgage lenders expect payments to continue as long as the person remains disabled or doesn’t earn wages in excess of the SSA’s limits.

Long-Term Disability

Most mortgage lenders take long-term disability payments as long as the borrower can prove that the payments will continue. To document reliable income, a person must give the lender a copy of the benefits statement or insurance policy that discloses the payment amount, frequency and end date. If the payments are set to end, the lender may disallow that income when assessing the application.

Other Considerations

Most long-term disability insurance requires a covered person to undergo occasional re-evaluations, but this process will not affect their ability to get a mortgage. If someone gets short-term payments, they may be able to use that income to get a mortgage if they can prove that they’ll eventually get long-term disability payments. However, the mortgage lender will use the long-term amount when calculating the borrower’s income.

Buying a home is a wonderful part of life, but for disabled people, the process may become more complicated. A person’s disability shouldn’t keep them from realizing the dream of homeownership, however. Potential borrowers can view this profile to find out more about home loans.