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If you're someone with a disability and need financial help, you can apply for a loan. Whether you can qualify will depend on the type of disability income you receive and the loan terms you need. Also, in some cases, getting a loan could temporarily disqualify you from receiving disability income. Keep reading to learn more about getting a loan while on disability.
You can get a loan while on disability if you qualify. Typical requirements include a minimum credit score and a maximum amount of existing debt (this varies based on your income). How long it takes to get a loan varies, but it shouldn't take more than a few days for many loans
A loan could change your Supplemental Security Income (SSI) eligibility. According to the Social Security Administration, a loan is not considered income. However, if you borrow money and don't spend it the same month, it will count toward your resource limit. If your resources exceed allowable limits, you will not receive SSI benefits for that month.
So if you get SSI, don't apply for your loan before you need it and consider applying at the end of the month.
If you plan to get a loan while on disability, the type of loan you get will depend on why you need it. Here are some options.
To get an unsecured personal loan while on disability, you will need to satisfy the lender's minimum credit score.
You'll also need to prove you can pay for the new loan on top of any existing debt. This can be an obstacle for people on disability, because you're receiving a very modest income. So there isn't much room for new debt payments. For help finding out about these limits, read up on the maximum you can borrow with a personal loan. Or you can check with one of the personal loan lenders on our list.
You may be able to use your long-term or permanent disability income to qualify for a mortgage. Some home loan programs will even give you special benefits if you are disabled. For example, if you're a disabled veteran, you can apply for a waiver of the VA loan funding fee.
Or if your income is low, the USDA has the Single Family Housing Direct Loan program, where the government pays a portion of your mortgage payment. You can find out more in our guide to USDA loans.
If you are on short-term disability, you can only count on those payments for a limited amount of time. Because your disability income will end, your mortgage application might be declined if you have no other sources of income. However, if you are still employed and can document that you have a job to return to after your disability benefits end, the mortgage lender may consider your regular income in addition to your disability income.
Some people look for a loan to bridge the gap between becoming disabled and the time they begin to receive disability payments. This is a personal loan, and you should approach it with caution. This type of loan can be expensive and have a short repayment period. If your disability claim takes longer than you expected, you risk defaulting on the loan. Also, if your disability claim is denied, you're still on the hook for the loan.
Before you take a short-term loan for anticipated disability, find out if you are eligible for emergency disability assistance. SSI recipients can get expedited SSI benefits under certain circumstances. To learn more about your options, it's a good idea to get in touch with your unemployment office.
You might have seen a brochure for medical loans on the reception desk at your doctor's office or dental clinic. These types of loans are used to finance medical expenses. They often have low interest rates and terms that result in affordable payments. Also, the application process is the same for everyone, regardless of whether you have a disability.
The catch is that most medical loans are deferred-interest loans. If you don't pay off the entire loan by the end of the promotional period, you will be charged interest from the start date of the loan, including the portion you have already paid off.
If you receive federal disability benefits, you will be eligible for either Medicaid, Medicare, or both. In some states, you can request coverage backdated to three months prior to your application for coverage. These may be better options for you to look into before you apply for a medical loan.
An auto loan is a secured loan that uses your car as collateral. If you default, the lender can take away the collateral.
You can apply for an auto loan while on disability without jumping through any special hoops. Most car loan lenders have a minimum credit score requirement and simply run a credit check to see if you qualify. Some will also verify your income.
A payday loan is a short-term, high-interest loan. If possible, it's best to avoid these loans.
Most people are unable to repay their payday loan in full by the due date. And when that happens, you'll have to renew the loan and pay more fees. If you can, it's better to find alternatives to payday loans before grabbing what looks like a fast, easy loan.
Here's how to get a loan on disability:
Be sure your credit report doesn't have any errors that could affect your ability to qualify for a loan.
Check with your local Department of Health and Human Services office to find out if you are eligible for financial assistance.
Special loan programs can help people on a limited fixed income get the financing they need.
Check rates with multiple lenders, especially those who will do a soft pull on your credit until you are ready to apply.
Avoid getting the loan too early, or you might jeopardize your disability income.
Your lender will tell you what documentation to submit.
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Yes. If you qualify, you can get a personal loan while on disability. Expect the lender to check your credit. You may need to have a minimum credit score or a maximum debt-to-income ratio, and your lender will probably want to see proof of your income.
In most cases, yes. Long-term disability benefits and permanent disability insurance count as income for the purpose of qualifying for a loan.
It's a good idea to talk to lenders and government agencies about special programs that might make it easier for you to get your financial needs met. Once you identify the right program, applying for a loan on disability is no different from applying under other circumstances. Before you apply, make sure your credit file is error free, pay all of your bills on time, and pay down your other debt as much as you can.
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