Will I Lose My SSI If I Buy a House? Understanding SSI & Real Estate Transactions

Navigating real estate transactions can be complex, and adding government benefits like Supplemental Security Income (SSI) can make them even more challenging. Life events like buying or selling a house can significantly impact those receiving funds from this program. Here's what to know about the potential implications of these transactions on your SSI eligibility and benefits.

What Is SSI?

Supplemental Security Income (SSI) is a monthly payment the Social Security Administration provides to adults and children with disabilities (including blindness) who need financial assistance. These payments are also available to those aged 65 and older who qualify financially but don't have disabilities.

The recipients of SSI must also be U.S. citizens and reside in one of the states, Washington D.C., or the Northern Mariana Islands. This federal financial aid program has been operating since 1972 and was designed partly to streamline the criteria and other aspects of obtaining this kind of government support. 

While the Social Security Administration runs both programs, SSI and Social Security benefits differ. SSI is based solely on need, age, and disability, whereas an individual's work history determines Social Security benefits. SSI is also provided by the general funds of the U.S. Treasury, whereas Social Security benefits come from the Social Security trust fund.

To apply for SSI, individuals must fill out an online form for the Social Security Administration and wait to be contacted for an interview. About 2.6% of the U.S. population receives SSI support. 

Will I Lose My SSI If I Buy a House? 

Because there are strict limits on the value of your assets to qualify for SSI, some recipients may wonder if buying a house will cause them to lose their benefits. After all, the value of almost any home will far exceed the threshold of $2,000 for an individual or $3,000 for a couple. However, the SSI program does not include the value of a home in the total assets of its applicants or recipients, so buying a home in and of itself will not cause one to lose SSI. 

Can I Buy a House on SSI?

Because purchasing a home does not disqualify one from SSI benefits, SSI recipients can buy a house. However, it can be challenging to purchase property when on SSI due to the recipient's limited available funds. 

It's hard to save money on SSI for any individual or family. Beyond this, saving for a down payment or closing costs can also easily exceed the limit to one's assets that SSI has in place. For example, closing costs alone may be as high as $7,500 or more for a $250,000 home; if the buyer needs a down payment for the mortgage, they might need an additional $10,000 or more. In addition, new homeowners need to be able to take their new property taxes into account.

What Resources Are Available?

While difficult, it is not impossible to buy a home on SSI. Recipients can use several resources to bolster their chances of purchasing a home without losing their benefits. Certain types of mortgages, such as VA loans and USDA loans, require no down payment, so if the purchaser is eligible for one of these, they can just pay closing costs. 

Furthermore, ABLE accounts are available for disabled SSI recipients. These accounts allow individuals to save money without the funds counting against their asset limits. Finally, there may also be down payment assistance available from non-profits in the area. All of these resources can go a long way toward helping SSI recipients become homeowners. 

Will I Lose My SSI If I Sell My House?

Due to the asset limits tied to SSI eligibility, it's natural to wonder whether someone who receives SSI payments can sell their house without losing SSI. This answer is a bit complicated. 

The SSI program gives its recipients three months following the sale of their home (regardless of property type) to buy another house and reduce their assets to below their threshold ($2,000 for an individual and $3,000 for a couple). If the individual does so, they can retain their SSI benefits without needing to do anything. If they fail to do so, their benefits will change based on how much cash they kept from the sale, and they will need to follow some steps to reinstate their benefits again within one year. 

How Can I Reinstate My Benefits? 

To reinstate their benefits after purchasing a home and not reducing their assets within the first three months, an SSI recipient has 12 months to reduce their available funds below their threshold without giving money to people they know. The SSA requires records of how the recipients handle their money during this time, and if the individual fails to do all of this within the time frame, they will need to reapply for SSI benefits altogether. 

SSI & Your Home

Buying or selling a house can potentially impact your SSI. However, the effects are determined by various factors, including how you manage the profits from a sale or expenses of a purchase. While owning a home generally does not disqualify you from receiving SSI benefits, sudden influxes of assets from a home sale could jeopardize your eligibility if not handled correctly.

Before making any significant real estate decisions, it's essential to consult with a legal expert or financial advisor who understands the intricacies of SSI regulations to guide you through the process and help you avoid potential pitfalls.