Social Security 2026:
What’s Likely Changing
Expect a smaller cost-of-living adjustment (COLA) for 2026 compared with the pandemic-era spikes. Early projections peg it around 2.7%, but the official number lands in October and takes effect with January 2026 checks (SSI adjusts at the very end of December). 📆
For homeowners and homebuyers on Social Security, that modest bump can still nudge qualifying income, debt-to-income ratios, and monthly budgets—especially if Medicare premiums move too. I break down what’s expected, when it hits, and how to prepare your file so “future you” doesn’t wrestle with last-minute underwriting surprises.
🗓️ What’s expected—and when
🔗How COLA is set: SSA compares CPI-W inflation for July–September against the same period last year; that’s the only data that matters for the annual adjustment. The announcement typically drops in mid-October, and benefits change with January checks (SSI adjusts Dec 31).
2026 early read: 🔗The Senior Citizens League’s latest model estimates a ~2.7% COLA for 2026. That’s an estimate until SSA makes it official
Quick timeline
• Now–September: CPI-W data rolls in
• Mid-October 2025: SSA announces COLA and other annual changes
• Dec 31, 2025: SSI reflects the new rate
• January 2026: Retirement/disability benefits reflect the new rate
📈 What the number might be (and why)
The 🔗current best guess is ~2.7%, reflecting cooler inflation than 2021–2023 but not zero. COLA is mechanical—not political—and strictly follows CPI-W for the third quarter. Translation: the next two CPI-W prints (August, September) matter a lot. Expect plenty of headlines, but the math is the math
🧮 Mortgage implications for borrowers on Social Security
Income & DTI:
A higher benefit means a slightly higher qualifying income—useful for debt-to-income (DTI) ratios and approval margins.
Many agency loans allow “gross-up” of non-taxable Social Security income. 🔗Fannie Mae permits lenders to treat 15% of Social Security as non-taxable without extra documentation, and to gross up beyond that with proof of non-taxable status. (Lender overlays vary; we’ll apply the current rulebook to your scenario.)
Net check reality check:
Medicare Part B premiums (announced in the fall) can trim the take-home increase, so qualifying should consider net-of-Medicare cash flow, even though underwriting typically uses gross income. (We’ll watch the fall announcements so your budget—and expectations—line up.) AARP
Documentation to line up now:
Your SSA award letter / benefit verification, the latest SSA-1099, and evidence of continuance. If your 2026 benefit jumps, we’ll update income docs as soon as SSA posts the new notice.
🏦 Market backdrop: what COLA hints at for rates
A smaller COLA usually signals cooler inflation, which is generally friendlier for long-term bonds (think 10-year Treasury) and, by extension, mortgage rates. That said, rates dance to a bigger playlist—Fed policy, growth data, and global risk. Bottom line: a tame COLA won’t guarantee lower mortgage rates, but it nudges the vibe in the right direction.
✅ What to do next (practical game plan)
If you’re shopping this fall: Let’s pre-approve using today’s award letter, then refresh when SSA posts the 2026 amount—could improve your DTI cushion.
If you’re budgeting: Assume a modest bump; don’t spend it twice. We’ll run a side-by-side showing today’s payment vs. projected 2026 income.
If you’re refinancing: Timing matters—pair a COLA bump with any debt clean-up for a stronger file.
Paperwork pro-tip: Save your my Social Security login handy; the 2026 notice drops online first.
