If you have ever missed a mortgage payment or feared you might, you have probably come across the word “forbearance.” During the COVID-19 pandemic, millions of American homeowners entered mortgage forbearance programs. But many borrowers entered those agreements without fully understanding what forbearance actually is, how it works, or what happens when it ends. This guide covers everything you need to know, including the part most people do not find out until it is too late: what comes after.
What Is Mortgage Forbearance?
Mortgage forbearance is a temporary pause or reduction of your mortgage payments, agreed to by your lender or servicer during a period of financial hardship. It is not forgiveness. The missed or reduced payments do not disappear. They must be repaid, but the repayment structure is negotiated after the forbearance period ends.
Think of forbearance as a financial pause button, not a delete button. Your servicer agrees to not pursue foreclosure or report you as delinquent while you are in an approved forbearance plan. The debt is still there, accumulating, and you will need a clear plan for handling it on the back end.
How Does Mortgage Forbearance Work?
Requesting Forbearance
To enter forbearance, you contact your mortgage servicer directly and explain your hardship. For federally backed loans (FHA, VA, USDA, Fannie Mae, Freddie Mac), servicers are required to offer forbearance options for borrowers experiencing hardship. For conventional loans not backed by a federal agency, it depends on the servicer’s own policies.
Common qualifying hardships include:
- Job loss or significant income reduction
- Medical emergency or serious illness
- Natural disaster affecting the property
- Death of a co-borrower or income-contributing household member
- Divorce or separation
The Forbearance Period
Forbearance periods typically run 3 to 6 months initially, with extensions possible depending on your loan type and servicer. During COVID, CARES Act forbearance extended to 18 months for many federally backed loans. Outside of disaster-level policy, expect 3 to 6 months as the standard window. During this time:
- You make reduced or zero mortgage payments
- The servicer does not report you as delinquent to credit bureaus (as long as you were current when you entered forbearance)
- Foreclosure proceedings are paused
- Interest continues to accrue on your outstanding balance (for most loan types)
Interest During Forbearance
This is one of the least understood aspects of forbearance. For most conventional and government-backed mortgages, interest does not stop accruing just because your payments do. Every month you are in forbearance, interest builds on your outstanding principal. When forbearance ends, your balance may be higher than it was when you started. Make sure you understand your specific servicer’s policy on this before signing anything.
What Happens After Forbearance Ends?
This is where most borrowers get blindsided. Forbearance ends, and suddenly you owe everything you skipped. Here are the repayment options your servicer should offer you, and what each one means.
Option 1: Lump-Sum Repayment
The servicer asks for all missed payments at once, immediately upon exit. For most homeowners in financial hardship, this is not realistic. Do not assume this is your only option. It is not, and servicers are required to offer alternatives before pursuing foreclosure. If a servicer demands a lump-sum payment and claims it is mandatory, file a complaint with the CFPB immediately.
Option 2: Repayment Plan
The missed payments are spread over a period of several months, added on top of your regular mortgage payment. Example: if you skipped 4 months at $1,800 per month ($7,200 total), you might repay that over 12 months, adding $600 to your monthly bill. This works if your income has recovered enough to handle the higher payment. If not, this option will lead to more delinquency.
Option 3: Deferral or Partial Claim
This is the most borrower-friendly exit option. The missed payments are moved to the end of the loan as a non-interest-bearing balloon payment, due when you sell the home, refinance, or pay off the mortgage. Your regular monthly payment stays the same going forward. Fannie Mae, Freddie Mac, FHA, VA, and USDA all offer deferral options. Ask your servicer specifically about a COVID-19 Payment Deferral or Disaster Payment Deferral if applicable.
Option 4: Loan Modification
If your financial situation has changed permanently, not temporarily, a loan modification may be the right path after forbearance. The missed payments are rolled into a new loan balance, and your rate and/or term are adjusted to bring your monthly payment to a level you can sustain. This is a longer process than deferral but creates the most sustainable outcome for borrowers whose income has permanently changed. Our full guide on how to apply for a loan modification walks through the process step by step.
Option 5: Refinance
If your credit and income are in reasonable shape, refinancing after forbearance is an option for some borrowers. However, most lenders require that you have made at least 3 consecutive on-time payments after your forbearance period ends before they will approve a refinance. You cannot refinance out of forbearance while still in it.
How Does Forbearance Affect Your Credit?
The answer depends on whether you were current when you entered forbearance and whether your servicer is reporting the forbearance correctly. Under the CARES Act, servicers of federally backed mortgages were required to report accounts as current for borrowers who entered COVID forbearance. For non-COVID forbearance, how the account is reported depends on your servicer.
What you need to do: pull your credit report during and after forbearance and confirm that your account is being reported correctly. If your account is showing as delinquent while you are in an approved forbearance plan, that is a reporting error. Dispute it with the credit bureaus and with your servicer. The CFPB has a guide on disputing credit report errors that walks through the process.
Forbearance vs Deferral vs Loan Modification: Which Is Right for You?
These three tools are often confused, but they serve different purposes:
- Forbearance: Best for short-term hardship (3 to 6 months) when you expect to recover quickly. It buys time without permanently changing your loan.
- Deferral: Best if forbearance is ending and your income has recovered to pre-hardship levels. Moves the missed payments to the end of the loan with no interest.
- Modification: Best if your financial situation has permanently changed and your original payment is no longer affordable. Restructures the loan terms for the long haul.
The clear winner for most borrowers exiting forbearance whose income has stabilized: payment deferral. It keeps your monthly payment the same, does not add interest to the deferred amount, and requires no lengthy application process like a modification does.
Steps to Take If You Are Considering or Currently in Forbearance
- Know your loan type. Contact your servicer and confirm whether your loan is FHA, VA, USDA, Fannie Mae, Freddie Mac, or conventional non-agency. This determines what exit options are available to you.
- Get the agreement in writing. Do not enter forbearance based on a verbal promise. Ask for written confirmation of the terms, the length, and what the exit options are.
- Track all communication. Write down every call: date, rep name, what was discussed. This protects you if there is a dispute later.
- Monitor your credit report. Pull your report monthly at AnnualCreditReport.com to ensure your account is being reported correctly.
- Plan your exit early. Do not wait until the last day of forbearance to figure out what comes next. Start discussing exit options with your servicer at least 30 days before the forbearance period ends.
- Get free housing counseling. HUD-approved housing counselors are free, impartial, and specifically trained in loss mitigation. Find one at hud.gov. They can negotiate with your servicer on your behalf at no cost.
The Bottom Line
Mortgage forbearance is a legitimate, powerful tool for homeowners in short-term financial distress. But it is not a free pass. The payments you skip are waiting for you at the end, and entering forbearance without a plan for what comes next can turn a temporary problem into a permanent one. The best outcomes happen when borrowers go in with clear eyes, communicate proactively with their servicer, and plan their exit from day one.
If you are already behind on your mortgage or in active forbearance, read our complete guide on how to avoid foreclosure for a full map of every option available to you before you hit the point of no return.