There is admittedly no smoking gun on this. There was chatter among the Richmond gossip crowd that Benjamin preferred the company of men and that this was why his wife left him. There have also been some suggested, though no hard evidence, that he was kicked out of Yale after being caught in an act the authorities dared not speak of. There have been few major scholarly works on Benjamin, so the question has never been as deeply explored as it should have been. William C. Davis, perhaps the foremost biographer of Confederate figures, is among those who has concluded that he was probably gay. But unless some surprising evidence is discovered in some forgotten archive chest in a library somewhere, we will never know for sure. It gives the novelist a bit of wiggle room.
Benjamin was a man of secrets. He was very careful NOT to leave a paper trail for historians to follow. I have always found it fascinating that, despite being the closest counselor of Jefferson Davis throughout the entire war, and serving in no less than three crucial Cabinet positions, Benjamin is mentioned exactly twice in Davis's gargantuan memoir of the war years. As a literary character, however, it sort of made sense to go with Benjamin as a homosexual. It seemed to fit, for he was one of those historical figures who seems to be in the world yet not of the world. Just as he was a Jew in a society of Christians, he was also a gay man in a society that would never have comprehended, let alone accepted, such a thing had he ever chosen to put it out in the open for all to see.
I will say that Judah Benjamin was tied with Garnet Wolseley as the most fun character to write.