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SSDI - Can I get a loan if I get disability benefits?

If you are waiting to get Social Security Disability Insurance (SSDI) or if you are already receiving SSDI benefits you may be considering buying a home or car. If you need to make a large purchase you may need to apply for a loan but wonder if getting SSDI will limit your ability to qualify. Recently on our disability forum we had a claimant ask, “If I am getting SSDI benefits will I qualify for a loan?”


What does the lending company consider before giving you a loan?


The requirements to qualify for a loan will differ based on the type of loan. For instance, if you are applying for a home loan the creditor may be most interested in your income. Generally, lenders do not want borrowers to have monthly payments which are more than 28% to 44% of the borrower’s monthly income. They may not care that your income is a SSDI payment but because SSDI payments can be low this could substantially limit the amount of money you can borrow.

Next, the lender will review your credit score. If you have a high credit score it will be easier to get a mortgage. What if you have a bad credit score? The lender is more likely to consider you a higher credit risk and may choose to reject the application, require a large down payment, or assess a high interest rate in order to reduce the risk they are taking in loaning you money.

Will I be able to buy a car?


Buying a car will also be possible if you are receiving SSDI if you can meet the requirements. For instance, the lender will want to see that you have a sufficient source of income. You may be asked to provide stubs or bank statements to verify your income.

Additionally, you will have to provide proof of insurance, proof of identity and proof of residency. If you are trading in another car they will need the title and registration papers for your car.

As mentioned above, the amount of interest you will pay for the loan will have more to do with your credit score and credit history and less about whether you are receiving SSDI benefits.

What should you consider if you get SSDI?


The most important consideration if you are receiving a fixed monthly payment such as SSDI is making sure your purchases fit within your budget. It may be time to set aside the fantasy of owning the trendiest sports vehicle. Borrowing too much money or purchasing a large home may eat up too much of your monthly income.

Also consider saving money until you have a substantial down payment prior to making large purchases. Don't be fooled by "no down payment" schemes, because these lead to an inflated monthly payment term.

Bottom Line


Getting a loan while you are on a fixed monthly income such as SSDI is possible but the amount the lender may be willing to loan you may be lower.
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