Can You Buy a House With an ABLE Account?

Sep 11, 2023

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Saving for homeownership as a person with a disability can be challenging. Many disabled individuals receive benefits, such as Supplemental Security Income, that limit how much money recipients can have in savings.

ABLE accounts provide those with disabilities an opportunity save enough to purchase a house without putting their benefits at risk. In fact, according to a blog post from the Social Security Administration, ABLE accounts owners had an average of $6,000 saved in their accounts as of 2020 — enough for a 3% down payment on a $200,000 house.

ABLE accounts are a product of the Achieving a Better Life Experience (ABLE) Act of 2014. They're tax-advantaged savings and investment accounts for people with disabilities.

Funds in an ABLE account don't count toward asset limits for programs like SSI or Medicaid.

SSI, for example, doesn't let recipients have more than $2,000 in assets ($3,000 for couples). But with an ABLE account, an individual on SSI could save up to $17,000 per year.

ABLE account owners can withdraw money from their accounts for any qualified disability expense. This covers a broad range of expenses related to things like education, health, transportation, and housing.

So does that include a down payment for a home purchase?

"The answer to that is yes," says Miranda Kennedy, director of the ABLE National Resource Center. "The purchase of a home, payments for rent, and other housing related expenses, those are all qualified disability expenses."

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An ABLE account can make homeownership possible for individuals receiving means-tested benefits. These are government-provided benefits that consider factors like a person's income or assets before granting them.

Cheryl Walfall-Flagg, an ambassador for the ABLE NRC, first learned about these accounts at a workshop she attended several years ago. She had never heard of them before, and she was interested in opening one for her son, who she knew would one day need SSI.

Walfall-Flagg's son Sean, 21, and nephew Davante, 16, are on the autism spectrum. Today, both have ABLE accounts to save for their futures, including for homeownership. Walfall-Flagg and her husband are the legal guardians of Davante.

"I'm trying to teach them how to be on their own because number one, I won't always be here," Walfall-Flagg says. "And number two, the family members that we have, not everyone is always gonna be here. So they need to be able to have as much independence as possible and the ability to be secure and live their life to the fullest."

Tim Elliot, another ABLE account owner and ABLE NRC ambassador, found out about these accounts through an internet search. He was looking for programs that could help people with disabilities.

Elliot became paralyzed from the shoulders down as a result of spinal meningitis when he was in the Navy in 1991. He was able to get some movement back shortly after his illness, but he still uses a motorized wheelchair.

"Most of the time people with disabilities are poor because unfortunately, SSI — it's a good thing to have, but it's not meant to help you live the lifestyle that everyone else is living," Elliot says. "It's just there to give you the bare minimum so you're not really getting ahead."

He opened his account on the first day that New York made ABLE accounts available in the state. He uses the account as emergency savings and to save for a condo, which he hopes to be able to purchase next year.

Tim says he wants the independence that comes with owning your own home.

"I want a better quality of life, not just the building or apartment that I live in or the house I live in, but the surrounding areas," he says. "I want something that when I go outside, it'd be nice to look at."

Kennedy says that having stable housing through homeownership can have far-reaching benefits for people who are disabled.

One ABLE NRC ambassador who used his account to purchase a home, she says, was previously homeless for two decades. Having a home helped him get more stable employment and improved his health.

"There's that trickle effect between, 'now I am someone who is a homeowner and I can invest in myself, I can grow my assets, I can have stable housing, and I can stabilize other things,' including health, employment, your connections in a community, your sense of community," Kennedy says.

One of the more popular uses of an ABLE account for hopeful homeowners is saving for a down payment. Though conventional mortgages allow down payments as low as 3%, with current home prices that can amount to thousands or even tens of thousands of dollars.

But both homeownership and living with a disability come with a lot of other expenses, which makes an ABLE account a great vehicle for those who are preparing financially to own their own home. According to the IRS, the money in these accounts can be used for expenses related to:

Walfall-Flagg says that in addition to saving for a down payment, her son's and nephew's accounts will likely be used for support staff or support equipment, which she believes they'll need once they're on their own.

These accounts are currently available to individuals with a disability who acquired their disability before turning 26 and:

Note that you don't need to be under 26 to open an account — you just need to have acquired your disability prior to turning 26.

However, Congress recently raised this age requirement to 46, meaning that more people will be eligible for these accounts. The downside is that this new rule won't go in effect until 2026.

Parents and legal guardians can also open accounts for disabled individuals who are eligible. This can be a good way to plan for the future and ensure that any savings they have don't disqualify them for necessary benefits like SSI.

"One of the key things with my son, and one of the things that I share with a lot of folks, is that even though you don't receive benefits, you can still apply for the account if you meet the disability definition and you have that certification from a medical professional," Walfall-Flagg says. "Because down the road you might qualify, and if you have assets or if you have resources, then you won't be eligible because of that same $2,000 resource limit."

To open an ABLE account, you'll need to choose a state program to participate in. Currently, 46 states and Washington, DC, have ABLE programs, according to the ABLE NRC. Many programs allow out-of-state residents open accounts, so you don't necessarily need to use your state's program.

Currently, Idaho, North Dakota, South Dakota, and Wisconsin don't have active programs. If you live in one of these states, you'll still be able to enroll in another state's program.

The ABLE NRC website has a handy tool that lets you compare multiple states' programs at once. It will give you information like whether the programs come with any fees or minimum deposits, or how many investment options you can choose from.

Once you've picked an ABLE program, you'll be able to open an account online through the program's website. From there, you can start making contributions to the account and create a game plan for how much you want to save and how you plan to get there.

Keep in mind that these accounts come with contribution limits. In 2023, account owners can save up to $17,000 in their ABLE accounts. You'll also want to keep an eye on your balance as long as you have the account; any amount over $100,000 is counted toward your assets and could impact your SSI eligibility.

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