* Type of Compensation: Is it a lump sum payment, regular payments (like a settlement annuity), or something else? Lump sum payments might be considered as a down payment or part of the total assets used to qualify for the loan. Regular payments will likely be assessed as income, similar to a salary or pension, but lenders may require proof that the payments are reliable and will continue for a sufficient period.
* Amount of Compensation: The amount of compensation will significantly affect the loan approval. A large lump sum could make a down payment easier, but it doesn't guarantee approval. Regular payments must be sufficient to cover the monthly mortgage payments.
* Source of Compensation: The source is important. Compensation from a lawsuit, insurance settlement, or workers' compensation will all be viewed differently by lenders. Some sources might be more likely to be considered reliable income streams than others.
* Lender's Policies: Different lenders have different policies and risk tolerances. Some may be more willing to consider compensation as income than others.
* Credit History: A good credit history is crucial for loan approval, regardless of the income source.
In short, while receiving compensation *can* help someone get a home loan, it's not a guarantee. The person will need to demonstrate to the lender that they have the financial stability and capacity to repay the loan. It's best to consult with several mortgage lenders to understand their specific requirements and eligibility criteria.