A person who is on workers compensation may still be employed despite the injury that has caused the provision of the the workers comp. When a person wants to get a mortgage loan, his income will still be evaluated to determine his capacity to repay the loan for the first three years of the loan. If he is out of work and he is only receiving workers comp as income, he may find that it would be very difficult to get a mortgage because hypothetical income cannot be used to determine whether a person can qualify. He cannot simply declare that he will get a job soon.
However, the workers comp may still be considered and it should be determined whether it is reasonable to expect that this income will continue for the first three years of the mortgage. If the borrower plans to retire within this three-year period, the effective income that will be considered will be based on what can be documented as his retirement benefits. This could be his Social Security pension and other retirement benefits.
For a borrower who has found a new job, his expected salary can be used in determining his income to determine if he could qualify for a mortgage loan. He must be able to show that the job has been guaranteed through a contract of employment that is non-revocable. He should also begin working within 60 days after the mortgage loan has been closed. The potential borrower must also have enough cash reserves and income during the time that he is not yet receiving his pay. The amount of savings and the income that he has should be sufficient for the monthly payments. This is a situation that is common among doctors who will start their residency or teachers who will begin teaching at the start of a school year.
However, if the employment will begin more than 60 days after the loan is to close, he may not qualify for a mortgage. He will have to wait until he could present a payslip or any other indication that he has started in his new job before he could qualify for a mortgage.