Mortgage Forbearance: What It Is and How It Works

Losing a job, facing a medical emergency, or dealing with a natural disaster can make it nearly impossible to keep up with your mortgage. When that happens, mortgage forbearance may offer the breathing room you need. Forbearance is a temporary agreement between you and your mortgage servicer that allows you to pause or reduce your monthly payments for a set period of time.

Forbearance is not forgiveness. You still owe the money. But it can prevent foreclosure and give you time to recover financially. In this guide we explain how forbearance works, the COVID-era programs that many homeowners relied on, the current options available, how forbearance affects your credit score, and the different ways you can repay what you owe once the forbearance period ends. We also walk through a real example showing the financial impact of a six-month forbearance on a $200,000 loan.

What Is Mortgage Forbearance?

Mortgage forbearance is an arrangement where your loan servicer agrees to temporarily reduce or suspend your monthly mortgage payments. It is designed for homeowners experiencing short-term financial hardship such as job loss, reduced income, medical bills, divorce, or a natural disaster.

During forbearance, your servicer agrees not to initiate foreclosure proceedings as long as you meet the terms of the agreement. The key characteristics of forbearance are:

• It is temporary. Most forbearance agreements last 3 to 6 months, though extensions may be available if your hardship continues.
• It is not debt forgiveness. The missed payments are still owed. You will need to repay them through one of several methods after the forbearance period ends.
• Interest may continue to accrue. Depending on your loan type and servicer, interest may keep building on your unpaid balance during the forbearance period.
• You must qualify. You need to demonstrate that you are experiencing a legitimate financial hardship. Your servicer will ask for documentation before approving the request.

The most important thing to remember is that you should contact your servicer before you miss a payment. Forbearance is meant to be proactive, not reactive. Calling after you have already defaulted makes the process more complicated and may limit your options.

COVID-Era Forbearance Programs

The COVID-19 pandemic triggered the largest mortgage forbearance program in U.S. history. Under the CARES Act of 2020, homeowners with federally backed mortgages (FHA, VA, USDA, Fannie Mae, and Freddie Mac) were entitled to up to 18 months of forbearance with no documentation required beyond a verbal or written request.

At the peak in mid-2020, roughly 4.7 million homeowners were in active forbearance, representing about 8.5% of all mortgages. The program was extended multiple times through executive orders and regulatory guidance.

Those COVID-era forbearance programs have now ended. New forbearance requests related to COVID are no longer automatically approved. However, the experience did reshape how the mortgage industry handles hardship. Many servicers now have more streamlined processes and are more willing to work with borrowers who proactively communicate about financial difficulties.

If you are still dealing with financial fallout from the pandemic or from any other hardship, you can still request forbearance under your servicer's general hardship policies, but you will need to go through the standard qualification process.

Current Forbearance Options

Today, forbearance is available through several channels depending on your loan type:

• FHA loans: Borrowers experiencing hardship can request forbearance through their FHA-approved servicer. FHA allows up to 12 months of forbearance in most cases, sometimes with extensions.
• VA loans: VA loan holders can request forbearance through their servicer. The VA does not mandate a specific program, but servicers typically offer forbearance for documented hardships.
• Fannie Mae and Freddie Mac loans: These loans offer several loss mitigation options, including short-term forbearance (up to 6 months) and long-term forbearance (up to 12 months) for borrowers who cannot make their payments.
• Conventional loans not backed by government entities: Forbearance options are entirely at the discretion of your loan servicer. Many servicers do offer forbearance programs, but the terms vary widely. You must contact your servicer directly.
• Jumbo loans: Jumbo loans fall outside government guidelines. Whether forbearance is available depends on the investor who holds the loan and the servicer's policies.

The process to request forbearance is straightforward in almost all cases: call your mortgage servicer, explain your hardship, and provide supporting documentation such as a termination letter, medical bills, or proof of reduced income. Your servicer will review your request and respond, often within a few business days.

How to Request Forbearance

Follow these steps to request a mortgage forbearance:

1. Contact your mortgage servicer early. Do not wait until you have missed a payment. Most servicers prefer to work with borrowers who are proactive about their financial situation.
2. Explain your hardship. Be specific about why you cannot make your payments. Common qualifying hardships include job loss, reduced work hours, medical emergency, natural disaster, military deployment, or divorce.
3. Gather documentation. Depending on your servicer, you may need to provide a termination letter, pay stubs showing reduced income, medical bills, or a letter from your employer. Having these ready speeds up the approval process.
4. Ask about the terms. Before agreeing, make sure you understand: how long the forbearance lasts, whether interest continues to accrue, how you will repay the missed amount, and whether the forbearance will be reported to credit bureaus.
5. Get the agreement in writing. Do not rely on a verbal promise. Ask for written confirmation of the forbearance terms, the start and end dates, and the repayment plan you will follow afterward.
6. Stay in contact. If your hardship extends beyond the initial forbearance period, contact your servicer before the period ends to discuss an extension or alternative repayment options.

How Forbearance Affects Your Credit Score

The credit score impact of forbearance is one of the most common concerns for homeowners, and the answer depends on your loan type and how the servicer reports it.

For federally backed loans during the CARES Act period, servicers were required to report accounts in forbearance as current if the borrower had been current before the forbearance. This meant no negative impact on your credit report. However, that protection is tied to the now-ended pandemic programs.

For non-federal loans or new forbearance requests, the reporting varies by servicer. Some servicers will report the account as current if you were current before the forbearance. Others may report it as a special payment arrangement or as delinquent, which could lower your credit score. The impact can range from a minor dip of 20 to 50 points to a more significant drop depending on how the servicer codes the account.

To protect your credit, always ask your servicer specifically: "How will this forbearance be reported to the credit bureaus?" Get the answer in writing if possible. Even if the forbearance is reported negatively, the damage is usually temporary and less severe than the impact of a missed payment, collections account, or foreclosure.

Forbearance vs Deferment vs Modification

Homeowners often confuse three related but distinct mortgage relief options. Understanding the differences helps you choose the right path.

Many servicers combine these tools. A common sequence is a forbearance period followed by deferment of the missed balance to the end of the loan, or a loan modification that rolls the missed amount into the new loan balance and extends the term. Ask your servicer which combination makes sense for your situation.

Repayment Options After Forbearance

When your forbearance period ends, you will need to repay the missed amount. Most servicers offer several options:

Lump-Sum Repayment

You pay all missed payments in a single lump sum when the forbearance period ends. This is the simplest option and avoids any additional interest charges, but it requires having the cash available. On a $200,000 loan with a $1,350 monthly payment, six months of forbearance would require a lump sum of approximately $8,100.

Repayment Plan

The missed amount is spread over a set number of months and added to your regular mortgage payment. For example, if you missed $8,100 over six months, your servicer might add $338 per month to your regular payment for 24 months. This option makes the catch-up more manageable but increases your monthly payment temporarily.

Loan Modification

Your servicer modifies the terms of your mortgage permanently. This might involve extending your loan term, reducing your interest rate, or capitalizing the missed payments into your loan balance. A modification lowers your monthly payment but may increase your total cost over the life of the loan. For example, capitalizing $8,100 of missed payments into a $200,000 balance at 6.5% and extending to 35 years could reduce your payment but add thousands in extra interest.

Deferral

The missed payments are placed at the end of your loan as a balloon payment or added to the principal balance to be paid when you sell, refinance, or reach the end of the term. Your regular payment stays the same, but you will owe more at the end.

Real Example: Six-Month Forbearance on a $200,000 Loan

Let us walk through a concrete example to understand the financial impact. Consider a homeowner with the following loan:

• Loan amount: $200,000
• Interest rate: 6.5%
• Loan term: 30 years
• Monthly P&I payment: $1,264
• Property tax and insurance (PITI): $450/month
• Total monthly payment: $1,714

This homeowner experiences a job loss and enters a 6-month forbearance starting January 2026.

During Forbearance (January to June 2026)

The homeowner makes no mortgage payments. Over six months, they accumulate:

• Missed principal and interest: $1,264 x 6 = $7,584
• Interest accrued on unpaid balance: approximately $6,438 (calculated month by month on the outstanding balance)
• Total missed amount (P&I only): approximately $14,022

If property taxes and insurance are escrowed, those may also need to be repaid, adding roughly $2,700. The total amount owed after forbearance could approach $16,722.

Repayment: Repayment Plan Option

If the servicer offers a 24-month repayment plan, the missed P&I of $14,022 is added to the regular payment:

• Monthly catch-up amount: $14,022 / 24 = $584
• Regular monthly P&I: $1,264
• Temporary new payment: $1,264 + $584 = $1,848

The homeowner's total monthly payment including taxes and insurance would temporarily rise from $1,714 to approximately $2,298 for two years.

Repayment: Loan Modification Option

If the servicer capitalizes the $14,022 into the loan balance and extends the term from 27 years remaining to 30 years at the same 6.5% rate:

• New loan balance: approximately $213,480 (remaining balance of $199,458 + $14,022 capitalized)
• New monthly P&I: approximately $1,350
• Payment reduction vs repayment plan: $498 less per month

The modification lowers the monthly payment but adds approximately $22,000 in total interest over the extended term compared to the original loan.

Common Misconceptions About Forbearance

There are several myths about forbearance that can prevent homeowners from getting help they need:

• "Forbearance means I will lose my home." The opposite is true. Forbearance is specifically designed to prevent foreclosure. It gives you time to recover financially while keeping your home.
• "Forbearance is the same as deferring payments to the end of the loan." Forbearance is the temporary pause. What happens to the missed payments afterward depends on the repayment plan you choose.
• "My credit score will be destroyed." While there may be some impact, it is usually less severe than the damage from missing payments without an agreement. Always ask your servicer how the forbearance will be reported.
• "I can only get forbearance during a pandemic." Forbearance has always been available for documented financial hardships. The pandemic programs simply made it more accessible and widespread.

When Forbearance Is the Right Choice

Forbearance makes sense when you are facing a temporary hardship and expect to recover your income within 6 to 12 months. It is a safety net, not a long-term solution. Consider forbearance when:

• You have lost your job or income but are actively looking for work or waiting for benefits to begin.
• You are dealing with a medical emergency that temporarily prevents you from working.
• You have been affected by a natural disaster and need time to recover.
• You are going through a divorce and need time to restructure your finances.

If your hardship is likely to be permanent or long-term, a loan modification may be a better option than repeated forbearance periods. If you are already behind on payments, talk to a HUD-approved housing counselor who can help you evaluate all available options at no cost.

Frequently Asked Questions