What is mortgage forbearance?
Mortgage forbearance is one of several options loan servicers can offer borrowers who aren’t able to make their payments. Find out whether it could be a good choice if you’re experiencing financial hardship.
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Writer, Fox Money
Amy Fontinelle is a personal finance journalist and expert on budgeting, credit cards, mortgages, insurance, and taxes. She has bylines at Forbes, The Motley Fool, Reader's Digest, and USA Today.
Updated September 12, 2024, 3:39 PM EDT
Written by
Senior editor, Credible
Reina Marszalek has over 10 years of experience in personal finance and is a senior mortgage editor at Credible.
Fox Money is a personal finance hub featuring content generated by Credible Operations, Inc. (Credible), which is majority-owned indirectly by Fox Corporation. The Fox Money content is created and reviewed independent of Fox News Media. Credible is solely responsible for this content and the services it provides.
A monthly mortgage payment can feel unbearable when your financial situation changes, a circumstance many homeowners grapple with. Almost 4% of homeowners with mortgages were delinquent in the first quarter of 2024, according to the Mortgage Bankers Association. Still, there are options that can offer stability if you’re navigating financial challenges.
One option that can help if loan payments are becoming difficult to make is a mortgage forbearance, which allows borrowers to pause or reduce payments for a period of time. Learn more about how mortgage forbearance works, who qualifies, and how to apply.
What is mortgage forbearance?
Mortgage forbearance is a temporary pause or reduction in mortgage payments. Your mortgage servicer — the company that takes your mortgage payments — might allow this pause if you’re experiencing a financial hardship that may be resolved in a few months to a year.
How does mortgage forbearance work?
Mortgage forbearance starts with a conversation with your loan servicer where you explain that you’re having trouble making your payments. To determine your eligibility, you’ll need to submit an application detailing your current circumstances. Certain hardships, such as a distant employment transfer or the death of a borrower, require you to submit supporting paperwork; others, such as unemployment and divorce, may not.
Regardless of your type of hardship, you’ll need to submit documentation of your income and assets (excluding retirement and college savings accounts), along with a list of your expenses.
If your servicer approves your application, you’ll be relieved from paying your mortgage for up to six months. If you’re eligible for extensions, forbearance can last as long as 12 months.
When your mortgage forbearance ends, you’ll create a plan with your lender to bring your home loan current. Your loan servicer might offer the following options:
- Reinstatement: You’ll be required to pay back every payment you missed immediately.
- Repayment plan: A portion of your missed payments will be added to your regular monthly payment.
- Payment deferral: Your missed payments will be added to the end of your mortgage term without interest.
- Loan modification: Missed payments will be added to your loan balance, and the loan will be adjusted to give you lower monthly payments. This might mean lowering your interest rate or extending your loan term.
Who qualifies for mortgage forbearance?
If your mortgage is owned by Fannie Mae or Freddie Mac, you may qualify for forbearance if your income has been reduced, your housing expenses have gone up because of increased property taxes or homeowners insurance premiums, or you’ve experienced a natural disaster. If you, your co-borrower, or dependent family member has become disabled or seriously ill, you can also request forbearance. In addition, you may also qualify in the event of divorce, the death of a co-borrower, being transferred at least 50 miles for work (this includes permanent change of station orders for military service members), and other circumstances.
You are unlikely to qualify for forbearance in the following cases:
- Your home has lost value
- Your adjustable-rate mortgage has reset
- You have non-retirement assets that you can liquidate to pay the mortgage during an interruption to your income
- Your servicer determines your hardship is unlikely to resolve within 12 months
- You are already 12 months delinquent on your mortgage payments
- The mortgage is for a second home or investment property, not your main home (unless a natural disaster caused your hardship)
If none of the above applies, talk to your mortgage servicer to find out if there are other forbearance options available and what the terms and conditions are.
Tip:
There is no cap on how many times you can be eligible for mortgage forbearance. If you’ve previously been in forbearance and resumed making payments, then experienced another hardship, you can apply for forbearance again.
What are the pros and cons of mortgage forbearance?
Mortgage forbearance can provide much-needed relief, but it also has consequences. It’s important to weigh your options before you sign a forbearance agreement:
Pros
- Lets you stay in your home: Mortgage forbearance gives you time to get back on your feet without having to move. Your loan servicer can’t initiate a foreclosure on your during forbearance.
- Offers low or no payments: Being approved for forbearance means your mortgage payment will be less of a financial burden in the near future.
- Helps avoid late charges: Your mortgage servicer normally has the right to impose late fees if it doesn’t receive your payment within 15 days of the due date. When you’re in forbearance, late fees won’t accrue.
- May temporarily cover some bills: If you pay homeowners insurance and property taxes through an escrow account held by your loan servicer, your servicer might pay these bills on your behalf. You’ll have to repay the cost later, if so.
Cons
- Could impact credit: Your loan servicer will report your forbearance status to the credit bureaus. Your mortgage loan may be reported as delinquent, not current.
- May preclude other options: Typically, you must have no delinquent payments in the past 12 months to qualify for a new mortgage. This means that entering forbearance could prevent you from refinancing into a more affordable loan.
- Doesn’t eliminate what you owe: You will still owe any amounts you don’t pay during forbearance. Forbearance is not forgiveness. While you can avoid late fees, interest may still accrue on your outstanding loan balance.
- Can be canceled if you violate the terms: For example, if your forbearance plan requires you to make reduced payments, and you stop making them without discussing it with your servicer, you can go into default and start incurring fees.
How to apply for mortgage forbearance
To apply for mortgage forbearance, you may need to complete a mortgage assistance application and submit it to your loan servicer. Some companies allow you to complete this process online. In some cases, your servicer may be able to collect the necessary information over the phone.
It may take up to 30 days for your servicer to review your application and approve or deny your request.
Keep in mind:
You don’t have to wait until you have missed payments to apply. You can apply as soon as your financial situation has changed and you know you won’t be able to make your next payment in full before the grace period ends.
That said, if you haven’t missed any payments yet, you may want to look into refinancing first. The best time to apply is before your credit takes a hit from entering forbearance. For example, Fannie Mae’s RefiNow program is an option to consider because of its more lenient borrower requirements compared to other refinance programs.
What is mortgage forbearance FAQ
How does mortgage forbearance affect my credit?
Fannie Mae and Freddie Mac require loan servicers to report your mortgage as delinquent when you’re in forbearance. A delinquent account on your credit report will hurt your score. Typically, your score will be dinged more if you have good credit when a delinquency is reported than if you have bad credit, according to FICO, a major credit scoring company.
How long does mortgage forbearance last?
Mortgage forbearance can last for up to 12 months, including extensions. The initial term can be up to six months. Your loan servicer will decide how much time to give you after evaluating your circumstances.
Can I extend my mortgage forbearance period?
If Fannie Mae or Freddie Mac owns your mortgage, the maximum forbearance period is 12 months. If you’re nearing the end of a shorter forbearance period and your financial hardship hasn’t resolved, talk to your servicer about extending your forbearance.
Are there alternatives to mortgage forbearance?
Some states may still have Homeowner Assistance Program funds available through September 2026 to help you pay your mortgage, according to the Consumer Financial Protection Bureau.
Other options that let you stay in your home include refinancing, payment deferral, a repayment plan, or a loan modification.
If you don’t want to stay in your home because you don’t think you can afford it in the long run, you may be able to do a regular sale, short sale, or deed-in-lieu of foreclosure.
If you want to learn more about your options, call 1-855-437-3243 to talk to a housing counselor for free or visit the Consumer Financial Protection Bureau’s website.