Dear Real Estate Adviser,
My son is disabled and receives a monthly Social Security disability check. He is 24 and has never obtained any credit. After living in apartments all his life, he desperately wants to buy a modest home around $100,000 or less. Can you recommend any lenders or programs that may assist him with this?
-- K. Johnson
There are some programs that conceivably could help your son reach his goal of homeownership but they're far too few, in my humble estimation, and often underfunded and typically not comprehensive. Unfortunately, only about 5 percent of the disabled who receive Social Security income, such as your son, own their homes. Since the annual household income of disabled persons is typically a little more than $25,000, that's usually too low to save for a down payment or afford monthly payments. But don't despair yet. With some resolve and a thorough scouring of available programs, your son's goal may be achievable.
Let's explore some of the options:
The U.S. Department of Housing and Urban Development, or HUD, offers Housing Choice Vouchers, also known as Section 8 program vouchers, which constitute significant financial help for both homebuyers and renters. In many large metropolitan areas, local public housing agencies, or PHAs, control blocks of for-sale housing units, and HUD vouchers offer monthly mortgage-payment assistance for approved recipients. Many such PHAs, by the way, give preference to people who have been residents of their communities for at least a year. However, some of these programs have very long waiting lists and many smaller cities have no Section 8 program participation whatsoever. Go to hud.gov for lists of participating PHAs and city contacts.
Fannie Mae's HomeChoice program offers disabled borrowers, or families who have a disabled family member, mortgages, a low down payment program (typically $500 required) and other qualification help in the form of relaxed credit evaluations and less restrictive debt-to-income demands. The program also allows the buyer to count rent payments from any boarders as income. All states offer this first-time homebuyer program. Contact local lenders, including community banks and credit unions, to see if they participate and visit fanniemae.com.
The nonprofit Habitat for Humanity builds accessible homes for the disabled and other people in need. Homes are constructed by volunteers and recipients get favorable mortgage loans that are cosponsored by private donations and a variety of local, private, state and federal resources. Go to habitat.org for more information. Because there's no profit built into these projects, a $100,000 home typically costs a recipient about $60,000.
Some states, such as Maryland, have their own customized first-mortgage programs for people with certifiable disabilities that feature low-interest loans. Other states offer first-time homebuyer programs with friendly lending terms but are usually geared for buyers who earn from 60 percent to 80 percent of the median income. Persons with disabilities average below the 30 percent to 35 percent level and typically can't qualify.
Also, visit disabled-world.com, which features lists of local, state and national programs offering mortgage assistance and other housing aid to the disabled, plus links to organizations offering guidance to first-time homebuyers. The National Opportunities for Affordable Housing Foundation (noah-dpa.org) is worth a look-see as well. It spotlights various grants and programs for down-payment and closing-cost assistance, which apply to the disabled.
I wish your son the best of luck in his quest for independence and homeownership. Frankly, it's a national shame that we don't have more such programs benefiting persons with disabilities, especially when you consider that nearly one in five Americans has some form of disability.
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