Will I Lose My SSI If I Buy a House? How SSI Affects Homebuying

Sep 10, 2023

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Supplemental Security Income, or SSI, is a program for disabled individuals with limited income and resources. Individuals who receive monthly SSI benefits are subject to income and asset resources set by the Social Security Administration.

These limits mean that recipients have to be careful about big purchases that could push them over SSI asset limits and jeopardize their eligibility.

Those receiving SSI may worry that buying a house will make them ineligible for benefits, since SSI limits how much recipients can have in assets. Fortunately, there are exceptions to this rule, and the house you live in doesn't count toward those asset limits.

So, SSI recipients can buy a house on SSI without losing their benefits. But the feasibility of actually doing so is a different story.

"Your primary residence and your primary car is not counted against you, but gosh, the thought of trying to buy any sort of home as an SSI beneficiary, it would be extraordinarily difficult," says Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities.

SSI benefits are capped at $914 per month for an individual and $1,371 for married couples who both receive SSI. But this amount is reduced if you earn more than $65 per month or if you receive more than $20 per month from certain other types of benefits, such as Social Security. According to CBPP, the average monthly benefit was $621 in December 2022. If your only source of income is from SSI, you'll likely have difficulty affording a monthly mortgage payment.

Another major barrier to purchasing a home on SSI is the program's asset limits.

To qualify for a mortgage, borrowers typically need at least a 3% down payment and between 3% and 6% of the loan amount for closing costs.

This means that to buy a $200,000 home, the cash you'll need could range from $12,000 to $18,000. Even if you qualify for a no-down-payment mortgage, you'll still need a minimum of $6,000 to cover your closing costs.

But to remain eligible for their benefits, individuals receiving SSI can't have more than $2,000 in assets. Couples can't have more than $3,000.

And according to Romig, for most recipients, SSI is their main source of income. Even saving smaller sums of money can be extremely challenging.

"It would be hard to imagine SSI recipients having enough income coming in to be able to afford a mortgage payment and to have enough savings to be able to swing a down payment or even just the associated costs with home ownership," Romig says.

Another challenge for SSI recipients hoping to purchase a home is that most of the country is seriously lacking in affordable inventory.

The current median sales price of homes in the US is $467,700, according to the US Census Bureau and the Department of Housing and Urban Development. While many areas have entry-level homes for sale that cost significantly less than this, these types of homes are in particularly short supply.

"Even if we made it easier for people on SSI to purchase a home, the availability of affordable single-family homes is scarce in a lot of places right now," says Peggy Bailey, the vice president for housing and income security at CBPP.

In 2021, Freddie Mac estimated that the US is 3.8 million units short of a sufficient housing supply, and said that the shortage is even more severe when it comes to entry-level or starter homes, which are smaller, cheaper homes typically purchased by first-time homebuyers with smaller budgets.

Preparing for a home purchase without losing your SSI benefits is typically very challenging. But if you're interested in exploring whether homeownership is a possibility for you, here are some programs and resources that can get you started.

Those who are unfamiliar with the homebuying process and need advice from an expert can talk to a free or low-cost HUD-approved housing counselor. You can use this search tool to find a housing counseling agency near you.

ABLE accounts are tax-advantaged accounts for people with disabilities. These accounts allow individuals with disabilities who receive government assistance to save money without it counting against asset limits for those assistance programs.

According to the ABLE National Resource Center, the money in these accounts can be used for "qualified disability expenses," which includes housing.

There are a variety of low- or no-down-payment mortgages available, including:

Many individual lenders also have their own affordable mortgage programs for first-time or low-income borrowers.

To see what your options are, talk to a mortgage lender about getting preapproved for a loan.

Section 8 housing voucher program participants may be eligible to convert their rental assistance into a voucher to pay for a mortgage through the Section 8 homeownership program.

Not all public housing agencies offer this program, so you'll need to find out if it's available in your area.

There are also nonprofit organizations that provide assistance to those who are having trouble affording homeownership on their own, including things like down payment assistance or free homeownership education.

Talk to your city's housing authority to find programs that are local to your area or search online to learn more about national organizations, such as Habitat for Humanity.

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