Mortgage Loan | Can You Qualify While on Workers’ Compensation

Can you refinance or apply for a mortgage loan on Workers' Compensation?

We came upon a situation a few months back where a client called us for a refinance, but he was on Workers’ Compensation for the past few years. There are medical reasons, which I won’t get into on here, and it seems there is a strong possibility the Workers’ Compensation claim will last into retirement. So, we ask: Can someone qualify for a mortgage loan, refinance or otherwise if they are collecting Workers’ Compensation?

Despite the person’s injury, which caused the Workers’ Compensation claim, the person still might be considered employed. In general, the person’s income will still need to be evaluated, just like regularly employed person, to see if there is an ability to repay the loan during the first three years. However, if a person is out of work AND collecting Workers’ Compensation as his or her only income, that person may find it a bit difficult to get a mortgage refinance or loan because the income is considered hypothetical.

Of course this is not to say the income is not considered. It may still be considered to see if it is reasonable to assume the income will continue during the first three years of the mortgage loan. If there are retirement accounts, Social Security, Pension or other benefits then these funds should also be included.

If you’re finding yourself in this situation, seeing the mortgage rates at record lows and want to refinance, give our office a call at 415-441-5050×235, fill out our short application, get a rate quote, or contact us here.