Living with a disability is challenging enough, but when your condition is so debilitating that you cannot work, making ends meet on a limited income may result in a devastating financial burden. Although it is possible to get a loan to cover some of your expenses while you are receiving disability benefits through Social Security Administration (SSA), whether you actually can obtain one without it impacting your benefits depends on a variety of factors.
First, it is important to remember the difference between Social Security Disability Insurance (SSDI) benefits and Supplemental Security Income (SSI) benefits. In order to qualify for SSDI benefits, you need to have paid into the SSDI system through FICA taxes deducted from your payroll; as a result, you do not have to meet strict income and resource limits to receive benefits.
If, on the other hand, you are receiving SSI benefits, you are doing so because your financial resources are extremely limited. You cannot own more than $2,000 in assets as an individual or $3,000 assets as a couple and qualify for SSI benefits.
Although loan proceeds are not considered income for SSI purposes at first, you have to spend them the month that you receive them. If you do not, they will be counted toward your resource limit going forward and either reduce your benefit amount or disqualify you from receiving SSI entirely the following month or months. Similarly, if you loan someone else money, the money you get back from that person may be counted as a resource, although any interest earned on that loan will not be. Depending on your situation, you may qualify for expedited emergency SSI benefits.
One of the most sought-after loans for any individual is a mortgage. While it may be difficult to meet the criteria for a conventional mortgage, there are other types of mortgages available for those receiving SSDI or SSI benefits, including VA, USDA, and FHA mortgages. Often, these kinds of home loans will accept your disability benefits as income.
Automobile loans are also popular. Some car dealerships will verify your income, but they, too, often accept disability benefits as qualifying income. However, they have a minimum credit score requirement and will likely run a credit check to see if you qualify.
If you think that you need to apply for a loan, check your credit score and shop around for the best rates before you sign any paperwork. Then, speak to a trusted Social Security disability attorney to see how a loan might affect your benefits.