Can You Get a Loan While Receiving Social Security Disability Benefits?

In the US, your credit rating determines your ability to take out loans. But what if you’re on government benefits? Will your limited income prevent you from borrowing money?

Contrary to popular beliefs, people on social security disability benefits can apply for loans. In fact, some lenders are more inclined to grant loans to people on government benefits. That’s because, unlike employment or business income, these benefits are guaranteed income.

What Loans Can You Get?

While getting a loan is possible, your credit rating still factors in on what type of loan you can get. Also, social security checks can’t be garnished to pay for loans if you’re defaulting. So not all credit institutions would be willing to lend you money.

Some of the loans you can get while receiving social security disability benefits are:

Short-term Loans

Some lenders specifically offer loans to borrowers with limited income and low credit rating. These are mostly short-term loans in small amounts. You can generally borrow from $100 to $1,000. Terms usually range from a week to a year.

The downside to this type of loan, however, is that the interest rates are a lot higher than other credit options. Instead of helping, it might even put you in bigger financial trouble. So you should only consider these types of loans as a last resort. 

Payday Alternative Loans

With APRs capped at 28%, Payday Alternative Loans (PALS) is an excellent option for people with limited income. It’s a short-term loan that is regulated by the National Credit Union Administration.

It can be paid in either installment or lump sum, depending on the credit institution extending the loan.

To be eligible, you need to be a member of a federal credit union for at least a month. It also has no credit score or income requirements.

Because of the one-month membership requirement, this type of loan is not useful for emergencies.

Personal Loans

For those receiving income other than their disability benefits, taking out a personal loan is possible too. It can be in the form of a pension or child support, as long as it’s a stable income. Without an alternative source of income, your chances of getting approved for personal loans are minimal.

Home Mortgage

Yes, you can take out a home mortgage even while on disability benefits. Banks will consider your disability benefits as guaranteed income. Thus, you have higher chances of getting the financing you need.

You can also be eligible for certain government housing programs. The FHA, for example, grants home financing as long as your debt-to-income ratio is within the acceptable range. But since your mortgage amount usually depends on your income, your housing choices might be limited.

Credit Card Cash Advance

If you have a credit card and haven’t extinguished your credit limit yet, you might be able to take out a cash advance. Credit card cash advances generally have lower interest rates than personal loans and PALS. So it’s a good option if you are in urgent need of funds but don’t want to pay high interest.

Will Taking a Loan Affect Your Disability Benefits?

According to the SSA, your loan will not be treated as an income. Thus, it will not reduce your disability or SSI benefits.

However, if you received money without a stipulation for repayment, the SSA will consider it a gift. The amount will be added to your SSI resource limit.

Also, you will have to spend all the amount you borrowed within the month. Otherwise, it will form part of your SSI resource limit too.

If you go over the SSI resource limit of $2,000 for individuals ($3,000 for couples), you’ll be ineligible for SSI benefits the next month.


VICTOR MALCA LAW – A TRUSTED NAME IN FLORIDA

Victor Malca Law has over 25 years of litigation experience, we are the most trusted workers’ compensation lawyers in Florida. Our area of expertise is in representing injured workers on compensation benefit cases and disabled individuals claim social security disability benefits.

Our unwavering advocacy for employee rights and privileges are also recognized by our peers. Book a free consultation today.

Judy Ponio is a writer for Victor Malca LawABOUT THE AUTHOR

Judy Ponio is a writer for Victor Malca Law P.A. and enjoys helping people with questions about social security, workers compensation, and other serious matters involving people’s livelihood. She is not an attorney and her writing should not be considered legal advice.

 

Comments (29)

Hello

I am receiving my social security benefits at age 62 and presently residing in Spain.Am I eligible to apply for mortgage.

Thank you in advance.

Jean Brion

I get social sercurity disability I’m looking to see if I qualify for a loan

Iam 33 with 3 kids I only have a nuff to pay my bills iam on ssa ssi and I am trying to see how can I get a cash loan before Christmas do I can buy my kids gift please help

Trying to get a loan and I’m on Social Security

Can i door dash while on social security

I’m on disability income but I have no credit, but I have discover banking how can i get a loan?

Isame situation I’m without a vehicle and live rural how do I get a small loan for a cheaper vehicle I’m an auto mechanic as well

Can i get a loan im on disability

I’m on sad I Burgess just hit with back way back bills my ex had in my name i need 5000 but they will take 2500 so I need a loan just to pay it all off an make it one bill so I really need some help

Omg this auto correct which is never correct that was suppose to say I’m on SSDI

Im in between paydays I will not receive anything intil Monday,I need a small loan to get by intil then is that possible,I’m on SSI and ss

good good afternoon I would like to know how can you help me how to get a loan I received SSI please and thank you if you can help me

I need a loan before Christmas to get Christmas loan for my kids and 7 grandkids will you please help me asap

How can I get a loan on my SSI

Can someone help me

Can someone help me
Too paid my rent

How can I get a loan if I get SSI

I’m on disability and I need a loan to get some dental work done…is it possible?

After my knee surgery I intend to return to work after my knee heals. I am a truck driver

I’m on disability for mental illness .. I’m incapable of working.. it’s been 10 years now. How am I supposed to have enough money for anything. No loans no job can’t afford a car can’t provide food for myself feeding off families income. How am I supposed to survive if you say I can’t get more than 1,000 dollar loan. That is such a joke they’ll never give me even a single penny. And I’ll lose my benefits for life for a grand in my pocket. What America does to disabled is sad. I’m in my 30s and for a decade I was on bed rest with a deadly bipolar illness having episodes night and day until my head and heart erupted outta my veins and you expect me to hop outta bed with these Now sometimes reaccuring conditions after being traumatized for a decade and go to work where I do nothing but cry from what happened to me until my body goes into compulsions from excessive work. I know my fate is standing by the pharmacy with a homeless sign. Yea you should help me a get a 160,000 house and pay my mortgage.

Can I get a loan if I am on ssi

I am on retirement supplement disability how can I get a loan

I am on retirement supplement disability and I am looking to get a loan worse than I look to get one

Yes I’m on SSD as well. I was looking into getting a loan. But don’t want to violate any SSD rules. So basically I’m on SSD can get a loan and not be in violation

I’m on Disability and I need a loan too buy a washer and dryer can you please help me

I only get so much a month and I’m barely making it I really need help somebody call me on the phone saying it was hell for disabled people please explain to me how do I fill out the application to get a loan

Im on permanent SSD, with Good Credit is it possible for me to get a loan for $5 or 6000?

Hello. I am on SSI and struggling to have a good Christmas for myself,grandkids and whoever else I may choose. I also need to find reliable transportation. Can you help me please. Also the pandemic is not helping things.

I’m on social security I only make 1348. I need a loan for 1500. To pay my federal taxes. I’m already on a compromise with the irs. I’ve been living off the IRA. It has to be paid in full. I’m scared. I’m 66 years old. Any suggestions?
Lee Ann Powell

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