Supplemental Security Income (SSI) is a federal benefit available to people who are considered disabled by the Social Security Administration (SSA) and who meet certain strict asset and income guidelines. For the purposes of SSI financial eligibility, the SSA will count free rent or housing, or money that someone gives you to help pay for your rent, as income. This is called "in-kind support and maintenance" (ISM).
But if someone loans you money for rent and you're expected to pay it back someday, the SSA will exclude it when it determines your eligibility for SSI or your monthly SSI payment amounts.
If you haven't yet been approved for SSI benefits, getting free housing might make you ineligible for SSI (unless you have to repay its cost). This is because the SSI program has an income limit you have to meet in order to qualify. If you have any income, the value of the free housing you receive might put you over the SSI income limit.
What Is the SSI Income Limit?The amount of income you can receive and/or earn each month and still get SSI benefits depends on the federal benefit rate (FBR) and whether your state pays an SSI supplement. To learn more, read our article on income limits and SSI eligibility.
If you're already receiving benefits and you receive free shelter, and Social Security counts it as a gift of shelter rather than a loan, your SSI payment will be lowered. The way that ISM affects your SSI payments depends on your living arrangements. If you live in another person's home and someone in that household pays for your food and shelter, the SSA will use the "one-third reduction" rule and take away one-third of your SSI payment. (20 C.F.R § 416.1131(c).)
If you don't live in someone else's household, or you do but you pay for your own food, the "one-third reduction" rule doesn't apply. In that case, the SSA will use the "presumed value" rule to reduce your benefits. (20 C.F.R. § 416.1140(b).)
You can read in detail about these rules and how free food and shelter affect your SSI payment in our article on how in-kind income affects your SSI payment.
Money that you use to pay for rent might be:
If you receive a loan for rent, the SSA won't count it as in-kind support and maintenance as long as it is a bona fide loan. To be considered a bona fide loan for ISM, the loan must meet all five of the following requirements.
The ISM loan must be in the form of an agreement that can be enforced under the laws of the state where it was created. In other words, the lender must be legally able to force you to pay it back. The agreement can be either a spoken or a written contract, but it must be a valid contract.
The ISM loan agreement must be already in effect when you're given the money for shelter, or when you're given a free room. Also, you must have agreed on the terms of your repayment of the ISM when the ISM is provided.
If the repayment terms aren't determined until after you've begun to receive the free rent, whatever you received prior to establishing the repayment terms won't be considered a loan of ISM. This means that the SSA can use the value of the ISM you received to reduce your SSI payment.
In order for the SSA to consider a loan of ISM as a bona fide loan, you must accept the ISM with the express understanding that it will have to be repaid. Your requirement to repay must be:
The SSA requires that even if you aren't awarded SSI benefits, your lender will require you to repay the loan.
Your ISM loan agreement must set forth the plan or schedule for its repayment and the loan must expressly state that you intend to pay back the loan in one of the following two ways:
You can't promise to repay the loan with future services that you'll provide.
The more details you put into your loan agreement, the better. Details will show the SSA that the money is indeed a loan and not a gift for SSI purposes.
One word of caution: If you sell real estate or personal property for less than its fair market value, you can lose eligibility for SSI for a period of time. You can learn more by reading our article on how to sell assets and still qualify for SSI.
You need to make sure that the way your repayment plan or schedule is set up is actually doable under your particular set of circumstances. You must be able to show the SSA that you can repay the ISM loan with your own resources or income (and money from SSI). To decide if your plan is reasonable, the SSA will look at only the following:
If you're already receiving SSI, Social Security probably won't accept a plan to pay back the money with your future SSI payments alone. You'll probably need to be expecting some other form of future income, such as an inheritance, a court settlement (like a personal injury award), or a housing supplement from Section 8 or a nonprofit agency.
But if you haven't started receiving payments and are expecting to receive SSI back payments in a lump-sum payment, your repayment plan can include part of your SSI back pay.
Here are some examples of when a loan is considered to be a bona fide ISM loan. This means that the SSA will exclude the value of the ISM when determining your SSI payment amount.
Mr. Miller applied for SSI benefits on May 1, 2023. In his interview with the SSA, Mr. Miller states that his brother provided him with free housing as a loan and that he planned to pay him back with the back pay he gets from SSI. Mr. Miller provides the SSA with a copy of a written rental agreement that states Mr. Miller must repay his brother even if he's denied benefits, starting July 1, 2023. Based on the information provided, the SSA concluded that a bona fide loan existed between Mr. Miller and his brother in part because the repayment plan was unconditional on getting approved for SSI.
Mrs. Jensen was approved for SSI on January 1, 2024. At that time, Mrs. Jensen's daughter, with whom she lived, was paying for Mrs. Jensen's living expenses. The SSA treated Mrs. Jensen's room and board as a gift of food and shelter and decreased Mrs. Jensen's SSI payment by one-third. However, on March 1, 2024, Mrs. Jensen's daughter lost her job and could no longer pay for her mother's expenses without getting paid back. At that time, Mrs. Jensen and her daughter entered into an oral agreement for a loan of ISM. After meeting with both Mrs. Jensen and her daughter, the SSA concluded that the agreement entered into by Mrs. Jensen and her daughter was valid, and as of March 1, 2024, the date the rental agreement was made, the ISM was excluded when the SSA determined Mrs. Jensen's benefit amount.
The following are examples of when the SSA might conclude that loans for ISM are invalid. This means that the value of the ISM will be counted against the SSI recipients, lowering their payment or even making them ineligible for SSI.
Ms. Smith applied for SSI on June 1, 2023. At that time, she was living with her parents, who were providing her with a room free of charge. Before Ms. Smith applied, she and her parents entered into a written rental agreement that stated that the value of the room was a loan that Ms. Smith must repay if she was approved for SSI benefits. Because repayment of the ISM was conditioned on getting approved for benefits, the SSA concluded it was not a valid loan for ISM.
Mr. O'Connor was living with a friend when he applied for disability. The friend supplied his food and shelter, which was valued at $825 a month. At the time, Mr. O'Connor told the SSA that he had neither money nor resources. But Mr. O'Connor also stated that he had a rental agreement with his friend that required him to repay the loan with monthly payments of $100 per month out of his SSI check, once he got approved for SSI. The agreement also stated that Mr. O'Connor would repay the loan by providing lawn services valued at $50 a month. The SSA concluded that the agreement wasn't valid because Mr. O'Connor's SSI check wouldn't be enough to pay his share of the household living expenses of $825. The repayment plan was also not feasible because the rules do not allow repayment of an ISM loan to be made from services rendered (see requirement #4, above).
The rules regarding ISM loans are complicated, and if you don't follow them, you could lose benefits or have your benefits reduced. The way you handle your living arrangements or borrowing money can mean the difference between getting an SSI check or not. To become more familiar with the rules, read more about when Social Security treats loans as assets or income.
Contact the SSA directly if you still have questions or concerns regarding a loan of ISM and whether it's valid. You can call the SSA Monday through Friday at 800-772-1213 or visit your local field office to speak with someone in person.