FHA Loans for Disabled Persons: Your Complete Guide

Purchasing a home can be challenging for anyone but for those with disabilities it can seem nearly impossible. Fortunately, FHA loans offer a viable path to homeownership for disabled individuals. With low down payments, flexible credit requirements, and even grants to adapt homes, FHA mortgages help those with disabilities achieve the dream of owning their own home.

I’ve purchased homes before, so I understand how daunting the process can be. In this article, I’ll draw on my personal experience to provide a complete guide to FHA loans for disabled persons. Whether you’re looking to buy your first home or want to move to a more accessible residence, read on to learn how FHA loans can help you.

What Are FHA Loans?

FHA loans are government-backed mortgages insured by the Federal Housing Administration. Because the government guarantees these loans, lenders can offer more flexible terms to borrowers who may not qualify for conventional mortgages.

Some key features of FHA loans include

• Low down payments – FHA allows down payments as low as 3.5% of the purchase price. This makes it easier to buy a home if you don’t have a lot saved for a down payment.

• Low credit score requirements – You can qualify with a credit score as low as 580. Many conventional loans require scores of 620 or higher.

• Low income limits – FHA doesn’t set strict income limits. As long as you have enough income to afford the monthly payment, you can qualify.

• Allows gifts and grants – Your down payment can come from gifts, grants, or disability assistance programs.

FHA Loan Benefits for Disabled Borrowers

Beyond the standard FHA loan features, there are additional benefits for disabled borrowers:

1. Accepts disability income

FHA allows borrowers to use disability income like SSDI and SSI to qualify for a mortgage. You just need documentation proving it’s stable and will continue for 3+ years.

2. Waives mortgage insurance on grants

If you use grants to pay for home modifications, FHA won’t charge you mortgage insurance premiums on those costs.

3. Allows home adaptations

FHA loans let you finance accessibility improvements like ramps, widened doorways, and grab bars along with your home purchase.

4. Offers down payment assistance

Many down payment assistance programs work with FHA loans. These provide grants to cover your down payment so you don’t need cash saved up.

5. No monthly mortgage insurance

If you put 10% down or more, FHA waives the monthly mortgage insurance premium you’d otherwise pay.

FHA Loan Requirements

While FHA loans offer more flexibility, you still need to meet a few key eligibility requirements:

• Credit score – At least 580 for most lenders. No minimum required by FHA.

• Down payment – 3.5% of the purchase price from your own funds. Can be gifted.

• Income – Enough stable income to make monthly mortgage payments. Disability income counts.

• Debt-to-income ratio – Total monthly debt payments no more than 43% of gross monthly income.

• Homebuyer education – Required if you haven’t owned a home in the past 3 years.

• Owner occupancy – You must intend to live in the home as your primary residence.

How to Get an FHA Loan for a Disabled Person

If you meet the requirements, follow these steps to get an FHA mortgage:

1. Find out your loan options – Talk to a loan officer to learn if you qualify and how much home you can afford.

2. Get preapproved – Being preapproved shows sellers you’re a serious buyer. It also locks in mortgage rates for 60-90 days.

3. Make an offer – Once your offer is accepted, you’ll finalize loan details and paperwork with the lender.

4. Close on your home – This is when you sign the final mortgage documents and get the keys to your new home! Expect 1-2 months from offer to close.

Using FHA Loans to Modify Your Home

One of the best parts of FHA loans is you can make accessibility modifications right away without waiting to save up funds later. Here are a few options:

• Finance wheelchair ramps, stair lifts, widened hallways, walk-in showers, and other accessibility upgrades.

• Lower cabinets, sinks, counters, door handles, light switches, and electrical outlets.

• Install lifts or elevators to access different levels of the home.

• Adapt the bathroom with roll-in showers, grab bars, and adjustable toilets.

• Open floor plans improve maneuverability for those in wheelchairs.

• Other options: non-slip flooring, door openers, therapeutic bathtubs, alert systems, etc.

Down Payment Assistance Programs

Down payment assistance programs provide grants, forgivable loans, or sliding-scale mortgages tailored to low- and moderate-income borrowers. These innovative programs help disabled individuals cover their down payment and closing costs.

Many state and local governments offer down payment assistance funds, often called DPA grants. Non-profits like Habitat for Humanity also provide down payment assistance.

The U.S. Department of Agriculture (USDA) offers DPA grants to low-income borrowers in rural areas. Eligible households can receive up to $10,400 towards down payment and closing costs.

The Federal Home Loan Bank’s “Welcome Home Program” provides grants through participating lenders. Veterans and borrowers with disabilities often qualify. Grant amounts range $1,000 to $15,000 or more.

Finding the Best FHA Lender

As a borrower with a disability, finding the right FHA lender is key. Compare interest rates and fees, but also consider a lender’s experience with FHA loans for the disabled.

The lender you choose will guide you through every step of the unique FHA loan process. Look for a lender that’s knowledgeable, responsive, and committed to helping borrowers find the most affordable FHA mortgage option.

FAQs About FHA Loans for Disabled Persons

Can I get an FHA loan on disability income?

Yes, you can qualify for an FHA loan using disability income like SSDI or SSI if you can document it will continue for 3+ years. FHA also allows co-signers to help disabled borrowers qualify.

Do FHA loans take disability grants?

Yes, FHA allows down payment assistance grants from government and nonprofit organizations. Disability grants can cover your entire down payment and closing costs.

What modifications does FHA allow?

FHA allows any home modifications for accessibility. Ramps, stair lifts, roll-in showers, and other disability upgrades can be financed along with the home purchase.

Is mortgage insurance required on FHA loans?

Yes, unless you make a down payment of 10% or more. However, FHA doesn’t charge mortgage insurance premiums on grants used for modifications.

Achieve Homeownership with an FHA Loan

Buying a home is a major milestone in anyone’s life. Thanks to FHA loans, more disabled Americans than ever are realizing the dream of homeownership.

FHA mortgages open the door with low down payments, flexible credit rules, and funds to modify your new home for accessibility. If homeownership feels out of reach, know that FHA loans can make it a reality.