Forbearance

· 3 min read
Mortgage forbearance is an agreement with your lender to temporarily reduce or pause your monthly mortgage payments when you’re in financial distress — it’s not…

Mortgage forbearance is an agreement with your lender to temporarily reduce or pause your monthly mortgage payments when you’re in financial distress — it’s not forgiveness, just a delay. You still owe every dollar. The payments get pushed to later.

Forbearance became a household word during COVID-19, when the CARES Act let millions of homeowners with government-backed mortgages pause payments for up to 18 months. At its peak in mid-2020, roughly 4.3 million homeowners were in forbearance. Most exited successfully without losing their homes.

How Forbearance Works

You contact your loan servicer and explain your hardship — job loss, medical emergency, natural disaster, military deployment. If approved, the servicer agrees to accept reduced payments or no payments for a set period, usually 3–6 months (sometimes extended to 12+ months).

During forbearance:

  • Your credit score shouldn’t be damaged (if reported correctly by the servicer)
  • Late fees are typically waived
  • Foreclosure proceedings are paused
  • Interest continues to accrue on your balance

The critical question is what happens when forbearance ends. That’s where it gets complicated.

Exit Options After Forbearance

Reinstatement. Pay everything you owe in one lump sum — the skipped payments plus accrued interest. This is rare because if you could afford a lump sum, you probably wouldn’t need forbearance in the first place.

Repayment plan. Your missed payments get spread over 6–12 months on top of your normal payment. If you skipped $12,000 in payments and get a 12-month repayment plan, your monthly bill increases by $1,000 for a year. Manageable if your income has recovered.

Loan modification. The lender permanently changes your loan terms — extending the term, reducing the rate, or adding missed payments to the end of the loan. This is usually the best option for borrowers who’ve had a lasting income reduction.

Partial claim (FHA/VA/USDA). The government puts your missed payments into a separate, interest-free lien that comes due when you sell, refinance, or pay off the mortgage. You don’t pay it monthly — it’s essentially deferred. This was the most common COVID forbearance exit for government loans.

Deferral. Similar to partial claim — missed payments get tacked onto the end of the loan. Your monthly payment stays the same. You pay the deferred amount when you sell or refinance.

What Forbearance Doesn’t Do

Forbearance doesn’t erase your debt. It doesn’t reduce your principal balance. It doesn’t change your interest rate. And if you have a conventional loan (not government-backed), the terms are less standardized — your servicer has more discretion, which can be better or worse depending on who you’re dealing with.

Also important: forbearance can complicate future refinancing. Some lenders require 12 months of on-time payments after forbearance before they’ll approve a refinance. If you’re thinking about both, plan the timing carefully.

Frequently Asked Questions

Will forbearance hurt my credit score?

It shouldn’t, if the servicer handles it correctly. Under normal circumstances (and mandated during COVID), lenders report accounts in forbearance as current. However, if you were already 30+ days late before entering forbearance, those late payments still show on your report. And some servicers make mistakes. Monitor your credit report monthly during and after forbearance. Once you’re back on track, use the mortgage calculator to explore whether refinancing to better terms makes sense for your situation.