Example

David’s Story

David had never really thought about buying a home, figuring that such dreams were impossible for someone getting Social Security Disability Insurance (SSDI). This all changed on the day when he attended a home-buying workshop at a local blindness organization.

"They started talking about all these programs and strategies to buy a home and my ears perked up," he says. "I never thought someone living on disability benefits could ever own their own place, so it really caught my attention."

David started doing some research on how homeownership might affect his benefits. It didn't take long for him to realize that owning a home wouldn’t affect his SSDI benefits at all, because there’s no resource limit for people on SSDI. The hard part would be coming up with the money to make a down payment on a home.

So David started looking into various homeownership programs for people with low income. The best one he found was called an Individual Development Account (IDA) program. It was a matched savings program that helped people save money to buy their first homes. He thought it sounded too good to be true — every month he could save $100 of his SSDI benefits amount in his IDA. The nonprofit running the program would give a 2:1 match. That meant that for every $100 David deposited, the nonprofit would help him by giving an additional $200 when it came time to make his down payment! By the end of the year, he’d have a total of $1,200 in his account, and combined with the $2,400 the nonprofit would chip in, there’d be almost enough to make a down payment on a condo!

By doing the IDA program, David would also get free financial management classes. He knew that the added responsibility of owning a home meant he had to learn more about keeping track of his money. At the first class, he learned about credit scores. After class, he went home and checked his credit score online. David had always been a very responsible user of credit and always paid his bills on time, so he figured he’d have a great score. But there was a surprise in his credit report — there was a personal bankruptcy listed in it and that meant his score wasn’t as good as he had expected. David had never gone bankrupt, so he had no idea what was going on with his report!

He called up his IDA program to ask for their advice. They said that sometimes there are errors in credit reports and that you have to correct those errors. They helped him contact the credit reporting agencies and it turned out that David’s ex-wife had declared bankruptcy 8 years after their divorce. Her bankruptcy was put on his credit report by mistake! David filed a correction request with the reporting agencies and that fixed the credit problem and his credit score went up. After that, he made sure to keep a close eye on his credit report, because if there were negative comments on it, it could be hard to get a home mortgage.

When David had finished the IDA program and had $1,200 in his account and the promise of the $2,400 match from the nonprofit, he was ready to find a place to buy. With the help of the IDA program staff, David was referred to some local realtors with experience helping low-income homebuyers achieve their dreams. He interviewed them and chose his favorite. Then, David and his realtor began looking at condominiums in his price range. His realtor would pick him up at the train station. His realtor also understood that David wanted to find a home near transportation and shopping.

With his realtor’s help looking through the listings, David was able to find a good place. David remembers the first time he saw it, "It was great! Hardwood floors, granite counters, all stainless steel appliances, built-in washer and dryer." It met all of David's needs. It was a bit smaller than his apartment, but the space was much better utilized, so it actually felt bigger. The condominium also had access to a swimming pool and hot tub.

David bought it. The condo had sold in 2006 for $248,000, but with housing prices crashing recently, he was able to get it for $63,000 — a bargain! With his good credit history, David found a bank that would let him get a mortgage requiring only a 5% down payment, which was covered by his IDA savings and the $2,400 in matching money from the nonprofit. This all resulted in a monthly mortgage payment, including taxes and homeowners association fees, of less than $600 per month. David's rent in his ugly old apartment was actually $760 per month — more than what he now pays to own a home!

Today, as a very happy homeowner, David continues to work toward advancing his financial future. He has an internship at a local technology company and hopes to get a job at the same company when he gets his associate’s degree in Information Technology. He is even learning new skills by participating in his homeowners’ association meetings.