To qualify for a mortgage, you must typically meet minimum credit qualifications and show that you have a stable source of income that is sufficient to cover your monthly payment. Though some forms of income aren't acceptable to lenders, you can usually obtain a mortgage using your Social Security disability benefits or long-term disability payments.
Equal Credit Opportunity Act
The Equal Credit Opportunity Act is a federal law that prohibits mortgage lenders and other creditors from treating borrowers differently because of certain characteristics, such as gender, religion, race or marital status. Under the Equal Credit Opportunity Act, lenders cannot discriminate against borrowers because of a disability or the receipt of disability income. Likewise, lenders must treat your disability payments the same as any other income, and they cannot exclude this income from your mortgage application solely because of its source.
Social Security Disability
Lenders will typically include the full amount of your Social Security disability payments in your countable income as long as you can provide a copy of your award letter, bank statements, tax returns or benefit statements that demonstrate the frequency and amount of your payment. Most lenders will expect Social Security disability payments to continue as long as there is no clear evidence to the contrary, such as the presence of earned wages that exceed Social Security's limit.
Most lenders will accept long-term disability income as long as you can show that the payments will continue indefinitely. To prove that the income is reliable, you must provide the lender with a copy of your insurance policy or benefits statement that discloses your payment amount, payment frequency and whether there is an expected end date. If the documentation indicates that the payments will end, the lender may ignore the income when determining whether to approve your application.
Long-term disability insurance policies typically require covered individuals to undergo reevaluation at regular intervals, but a scheduled reevaluation won't affect your ability to qualify for a mortgage. If you are receiving short-term disability payments, you may be able to use the income to qualify for a mortgage if you can show that the benefits eventually will convert to long-term disability. However, the lender will use the long-term disability payment amount when calculating your income.
- Federal Trade Commission: Credit and Your Consumer Rights
- Fannie Mae: Selling Guide
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- Riversource Life Insurance Company. "Income Protection Solutions." Accessed July 13, 2020.
- Mutual of Omaha Insurance Company. "Disability Insurance." Accessed July 13, 2020.
- Ameritas Life Insurance Corp. "Disability Income." Accessed July 13, 2020.
Amanda McMullen is a freelancer who has been writing professionally since 2010. She holds a bachelor's degree in mathematics and statistics and a second bachelor's degree in integrated mathematics education.