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When I talk to borrowers who are struggling with mortgage payments, the conversation usually starts the same way: they're terrified, embarrassed, and convinced they're about to lose their home. But here's what I tell them after 7+ years in this industry—forbearance exists precisely for moments like this. The question isn't whether you should feel ashamed for needing help. The real question is whether forbearance is the right tool for your specific situation.
So I was talking to a borrower last week who'd just been laid off from her job. She'd heard horror stories about forbearance ruining credit scores and asked me point-blank: "Is this going to destroy my financial future?" Not gonna lie, I get this question almost daily, and the answer is way more nuanced than most articles let on.
Mortgage forbearance is a temporary agreement between you and your lender that allows you to pause or reduce your monthly mortgage payments during a period of financial hardship. Think of it as hitting the pause button—you're not erasing your debt, just getting breathing room to get back on your feet.
According to the Mortgage Bankers Association's March 2025 Loan Monitoring Survey, only 0.36% of mortgage loans are currently in forbearance, which translates to roughly 180,000 homeowners nationwide (MBA, April 21, 2025). That's actually down from 0.47% in December 2024—a positive trend showing that most borrowers successfully transition out of forbearance programs.
And here's where it gets interesting—the reasons people need forbearance have shifted dramatically since the pandemic. The MBA data shows that 76% of current forbearance cases are due to temporary hardships like job loss, divorce, disability, or death in the family. Another 21.4% stem from natural disasters, while only 2.6% are still related to COVID-19. This tells us something important: forbearance isn't just a pandemic relic; it's a standard loss mitigation tool that lenders use to help borrowers through legitimate rough patches.
At AmeriSave, we've helped thousands of clients navigate forbearance decisions, and I can tell you that understanding your specific situation is critical before you commit to any path forward.
Between you and me, not every financial struggle calls for forbearance. Here's when it makes sense:
You lost your job but have strong prospects for reemployment within 3-6 months. Your emergency fund is depleted, but your overall financial foundation is solid. This is textbook forbearance territory.
You're facing temporary disability that's preventing you from working, but you expect to return to your job. Medical bills are piling up, and mortgage payments are adding to the stress. Forbearance can provide critical breathing room.
Your home or workplace was affected by a hurricane, wildfire, or flood. Insurance payments are pending, but you need immediate relief. In fact, 21.4% of current forbearances fall into this category.
A spouse or partner who contributed to household income has passed away or you're going through divorce. The financial picture has changed dramatically, but you want to keep the home and can afford payments once you adjust to the new reality.
Let me paint you a picture of why forbearance can be a financial lifeline when used correctly:
This is the big one. The difference between forbearance and foreclosure is like the difference between taking a sick day and getting fired. Foreclosure is a legal process where your lender takes possession of your property after too many missed payments. It stays on your credit report for seven years and can drop your credit score by 200+ points.
Forbearance is a negotiated agreement that keeps you in good standing with your lender. You're essentially saying, "I can't pay right now, but I have a plan to catch up." This is the part nobody talks about—lenders actually prefer forbearance because foreclosure costs them money too.
Stable housing isn't just about having a roof over your head—it's critical to getting back on your feet financially. The MBA found that hundreds of thousands of borrowers have successfully exited forbearance and regained financial stability. You can't effectively job hunt, recover from illness, or rebuild after a disaster if you're also dealing with the chaos of losing your home.
Okay, real talk for a second. The biggest myth about forbearance is that you have to pay everything back at once. That's simply not true for most government-backed loans.
According to the Consumer Financial Protection Bureau, you typically have four options when your forbearance period ends.
Payment Deferral: Your missed payments move to the end of your loan term. You resume normal monthly payments immediately, but don't have to pay back the missed amount until you sell, refinance, or pay off the mortgage. This is often the easiest option if you can afford your regular payment.
Repayment Plan: A portion of what you owe gets added to your monthly payment for 3-12 months. Let's work through a real example:
Loan Modification: Your lender permanently changes your loan terms—typically lowering your interest rate, extending the loan term, or both—to make payments affordable. The missed payments get added to your loan balance.
Reinstatement/Lump Sum: You pay everything back at once. For most government-backed loans, servicers cannot require this. If your servicer only mentions lump sum repayment, specifically ask about other options. At AmeriSave, we help clients understand which repayment option makes the most financial sense based on their complete budget picture and long-term goals.
When you proactively contact your servicer and work through forbearance properly, you're demonstrating financial responsibility under difficult circumstances. You're showing that you take your obligations seriously and you're willing to communicate honestly about challenges. If you face financial difficulty again in the future, having successfully navigated forbearance the first time can make your servicer more willing to work with you again.
Look, I get it. This stuff is hard. But here's some actually good news: if you enter forbearance before missing payments and follow the agreement terms, your credit score impact should be minimal.
FICO research shows that mortgage forbearance typically results in a 3-8 point credit score decrease—not the 100+ point drop many borrowers fear. The study simulated 6-month and 12-month forbearance periods and found average score changes of -3.7 points and -7.5 points respectively (FICO, May 8, 2023).
Compare this to foreclosure, which can drop your score 200+ points and stays on your credit report for seven years. Forbearance, when properly reported, shows on your credit report as "current" with a possible notation about payment accommodation. At AmeriSave, we've seen thousands of borrowers successfully complete forbearance with minimal credit impact, and we provide guidance on maintaining your credit standing throughout the process.
Since March 2020, mortgage servicers have provided approximately 8.6 million forbearances. This means the system has processed millions of cases, worked out kinks, and developed efficient pathways from forbearance into permanent solutions.
Your servicer has likely handled hundreds or thousands of cases similar to yours. They know what works, what doesn't, and how to structure repayment plans that actually succeed. At AmeriSave, our loss mitigation specialists have guided countless borrowers through successful forbearance exits, and we've refined our approach based on real-world outcomes.
If you have an FHA, VA, USDA, or conventional loan backed by Fannie Mae or Freddie Mac, you have significant protections. These loans typically offer 12+ months of forbearance if needed, no lump sum repayment requirements, multiple exit options tailored to your situation, and specific guidelines servicers must follow.
For example, FHA's COVID-19 Recovery Standalone Partial Claim program helps borrowers with up to 30% of unpaid loan balance to cover arrearages.
Forbearance isn't free money, and there are legitimate downsides you need to understand before you sign up:
If you decide to sell your home while in forbearance or shortly after, your lender has first dibs on getting paid back from the sale proceeds. Any amount deferred under forbearance—plus any interest that accumulated—gets paid to your lender before you see a dime.
Let's say you deferred $10,000 in payments and interest accumulated to $400. Total owed: $10,400. When you sell, that $10,400 comes directly off the top of your proceeds before you get paid. If you're already underwater on your mortgage or have minimal equity, this could wipe out any profit from the sale.
Unless you choose payment deferral, you'll be facing higher monthly obligations when forbearance ends. Going back to our earlier example, adding $750 to a $1,500 payment means you're now paying $2,250 monthly. For 12 months. That's a 50% increase in your housing costs.
Between you and me, this is where I see borrowers get into trouble. They think they can handle the higher payment once back at work, but they don't account for rebuilding their emergency fund, catching up on deferred car maintenance, and dealing with all the other financial dominoes that fell during their hardship period.
Before accepting a repayment plan, run your numbers honestly. Can you truly afford that higher payment while also addressing other financial priorities?
During most forbearance periods, interest doesn't stop. It keeps accruing on your loan balance.
Let's work through the math on a typical forbearance:
That $8,124 gets added back to your loan balance. If you choose payment deferral, you're now carrying $258,124 in principal. Over a 30-year loan term at 6.5%, that additional $8,124 will cost you approximately $18,900 in total interest payments.
While the credit score impact is minimal if you follow your forbearance agreement, it's not zero. Lenders may report your account with a notation that payment terms were modified. According to Experian, servicers can note that payments are in forbearance even while reporting the account as current.
Future lenders who review your credit report may see this notation and factor it into their lending decisions. You might face higher interest rates on future loans, more stringent documentation requirements, waiting periods before refinancing, or challenges with mortgage assumptions or modifications.
Most lenders require a "seasoning period" after forbearance before you can refinance. Fannie Mae and Freddie Mac typically want to see three consecutive on-time payments after forbearance ends. Some private lenders may require 6-12 months.
This matters if interest rates drop significantly or if your financial situation improves and you want to refinance into better terms. You're locked into your current loan until you satisfy the seasoning requirements.
The forbearance picture in 2025 looks dramatically different from the pandemic years. According to MBA's ongoing monthly surveys, the forbearance rate has steadily declined from pandemic peaks of 8.5% in June 2020 to just 0.36% in March 2025.
What's particularly interesting is the shift in loan types. Ginnie Mae loans have the highest forbearance rate at 0.88%, compared to just 0.13% for Fannie Mae and Freddie Mac conventional loans. This reflects the fact that government-backed loans typically serve borrowers with less equity and smaller financial cushions.
The second quarter 2025 delinquency data from MBA shows overall mortgage delinquencies at 3.93% seasonally adjusted, below the historic average of 5.21% dating back to 1979 (MBA, August 14, 2025). This suggests the broader mortgage market is healthy, but certain segments—particularly FHA borrowers—are experiencing more stress.
Who's Using Forbearance in 2025?
The typical forbearance user has changed significantly. Marina Walsh, MBA's Vice President of Industry Analysis, notes that labor market health is keeping most borrowers current, but those who do need forbearance face serious challenges: 64-76% cite temporary hardship, 21-33% are recovering from natural disasters, and less than 3% are still dealing with COVID-19-related issues.
Bottom line? Forbearance in 2025 is serving its intended purpose: helping borrowers through legitimate temporary crises, not serving as a long-term payment avoidance strategy.
If you've decided forbearance is your best option, here's how to do it correctly:
This cannot be overstated. Call your mortgage servicer before you miss your first payment. Forbearance protections are strongest when you're proactive. Once you're already 60-90 days delinquent, your options narrow significantly.
Your servicer will likely request recent pay stubs or proof of income loss, unemployment benefits documentation, medical bills or disability paperwork, detailed monthly budget showing income and expenses, written hardship explanation, and documentation of when you expect the hardship to end.
Before agreeing to forbearance, get crystal clear answers to: exactly how long is the forbearance period, will you receive extensions if needed, how will the servicer report this to credit bureaus, what are your repayment options when forbearance ends, is interest still accruing, and are there any fees. If you're an AmeriSave client, our team can walk you through what each of these terms means for your specific situation and help you ask the right questions.
Do not accept verbal agreements. Insist on written documentation that clearly outlines start and end dates, payment expectations, repayment options, credit reporting procedures, and your rights and obligations.
Don't disappear once forbearance is approved. Most servicers will contact you about 30 days before your forbearance ends to discuss exit options. Be responsive. If your situation changes, contact them immediately.
Successful forbearance isn't just about getting into the program—it's about getting out of it successfully. Start planning your exit strategy from day one: save aggressively if your forbearance includes zero payments, document your financial recovery, research which repayment option makes most sense, and build at least 2-3 months of emergency fund before exiting forbearance.
At AmeriSave Mortgage Corporation, we understand that financial hardships happen to good people. If you're an AmeriSave client experiencing financial distress, we have dedicated teams trained specifically in loss mitigation and forbearance solutions. We can evaluate your specific loan type, your financial situation, and help you determine whether forbearance or another option makes more sense.
Our approach is to treat you like a person, not a loan number. We've helped thousands of borrowers navigate temporary financial challenges and find sustainable solutions that let them keep their homes. We offer various mortgage products and solutions designed to help borrowers in different situations, from conventional loans to FHA and VA products, each with specific forbearance provisions.
Whether you need forbearance, a loan modification, or help exploring refinancing options, our team works with you to find the solution that fits your unique circumstances. We know the stress you're under, and we're committed to finding a path forward that protects your homeownership.
Bottom line? Mortgage forbearance is a legitimate, valuable tool when used appropriately for temporary financial hardships. It's not a free pass or a permanent solution, but it can be exactly the lifeline you need to keep your home while you get back on your feet. The data supports this—8.6 million forbearances have been granted since March 2020, and the vast majority of borrowers have successfully transitioned out.
The key is being honest with yourself about your situation, understanding the full implications including repayment requirements, and having a realistic plan for how you'll resume payments when forbearance ends. Don't let pride or fear prevent you from reaching out to your servicer before you miss payments.
If you're experiencing financial hardship and considering forbearance, contact your mortgage servicer immediately to discuss your options. The earlier you act, the more options you'll have and the better your outcomes will be. At AmeriSave, we're here to help you navigate these difficult decisions with clarity and compassion.
How long you can get mortgage forbearance depends mostly on the type of loan you have and your own situation. If you have a government-backed loan, like an FHA, VA, USDA, or conventional loan backed by Fannie Mae or Freddie Mac, you can usually get a 3- to 6-month initial forbearance period. If you are still having trouble, you may be able to get extensions of up to 12 to 18 months. According to MBA data from March 2025, about 64% of people who are in forbearance are still in their first plan, and 17.6% are in extensions. The terms of private loans can change based on the policies of the lender. If you need more time, the most important thing is to call your servicer before your forbearance period ends. They'll look at your situation again and decide if an extension is needed. Extensions don't happen automatically; you have to show that you are still having trouble and can't start making payments again. Most of the time, the longest forbearance periods are for natural disasters, when it can take months or even years to get back on your feet.
If foreclosure proceedings have already started, forbearance might be able to stop them, but you need to act quickly and there is no guarantee that it will work. The sooner you call your servicer during the foreclosure process, the better your chances. If you're in the pre-foreclosure stage and have received a notice of default but no date for the sale, your servicer may be willing to stop the process and give you time to pay. If you're already deep into foreclosure and have a sale date set, though, forbearance is much less likely to happen. At that point, your servicer has already spent a lot of money on legal fees for the foreclosure process and may not want to change their mind. The best thing you can do is call a HUD-approved housing counselor right away at 800-569-4287. They can step in for you and help you talk to your servicer. If you agree to a loan modification or repayment plan, some servicers will stop the foreclosure, even if they can't offer you traditional forbearance. Time is very important here; the longer you wait, the fewer options you have.
Yes, but you'll need to keep better records of your income loss or decrease than a W-2 employee. People who are self-employed can get forbearance just like anyone else. The most important thing is to show that you are having trouble paying your mortgage and that you can't make the payments. To apply for forbearance, you'll need to send in documents like bank statements showing lower deposits, profit and loss statements comparing your current income to your income from previous years, canceled contracts or invoices showing lost business, and tax returns from previous years to show your baseline income. The problem for self-employed borrowers is that servicers may look at your application more closely because self-employment income can change from month to month. You should make it clear why your current situation is a real hardship and not just a normal change in business. If you're a wedding photographer and your income dropped by 70% because venues in your area closed, that's a clear hardship. It's harder to explain if your income is only down for one month during your normal slow season. One way to show the big drop is to figure out your average monthly income over the last 12 to 24 months and compare it to your current income.
This is one of the trickier parts of forbearance that borrowers don't expect. If your mortgage payment includes the principal, interest, taxes, and insurance through an escrow account, the terms of your forbearance may change based on the policies of your servicer. Most servicers will let you stop the whole payment, including the escrow part. However, this doesn't mean that your taxes and insurance don't have to be paid; they still have to be paid even if you're in forbearance. Your servicer usually keeps paying your property taxes and homeowners insurance from your escrow account even though you aren't putting money into it. You'll have to deal with this lack of escrow when forbearance ends. If your total monthly payment is $2,000 and $600 goes to escrow, and you are in forbearance for six months, you will have a $3,600 escrow shortage. Usually, your servicer will spread this shortfall over 12 months after forbearance ends, adding $300 to your monthly payment on top of the amounts you owe in principal and interest. Some servicers let you keep paying just the escrow part during forbearance and stop paying the principal and interest. This stops the escrow shortage, but it also means you're still making partial mortgage payments.
The effect on your ability to get other credit while in or after forbearance is real but not too bad. Your mortgage will usually show up on your credit report as current during forbearance, with a note about payment accommodation or modification. If you have this note on your credit report, credit card companies and auto lenders who check your credit may see it as a red flag that you are in financial trouble. If your credit report shows that you are actively forbearance, some lenders may turn down your application or give you a loan with a higher interest rate. When your forbearance period is over, you'll have to wait a while before you can refinance your mortgage. For Fannie Mae and Freddie Mac loans, this usually means making on-time payments for three months, but some lenders require longer. Different lenders have very different rules for other types of credit. Some credit card companies are more lenient, especially if your credit score hasn't dropped a lot. The good news is that these effects won't last long. Most lenders think your credit profile is back to normal after you've finished your forbearance and made 6 to 12 months of on-time payments. One good thing that people often forget about is that forbearance is a lot less harmful than other options. Your credit score may go down 3 to 8 points during forbearance, but it would go down 50 to 100 points or more if you missed payments and they were reported as late.
This is probably the question that makes me the most anxious, and I can see why. This is what really happens: Your servicer must contact you about your options about 30 days before your forbearance period ends. At this point, you'll need to send in new financial information that shows how much money you make and spend now. If you're still having trouble with money and can't make full payments again, there are a few things you can do, depending on the type of loan you have and your situation. If you have a government-backed loan, you may be able to get a loan modification that lowers your interest rate, extends your loan term to 40 years, or both. This would lower your monthly payment for good. There are special FHA loan programs, like the COVID-19 Recovery Modification, that can lower your monthly payments by 15% or more. You might also be able to get a longer forbearance period. Some borrowers have gotten more than 18 months of total forbearance when the situation calls for it. A partial claim is another option. With this option, some of your missed payments become a subordinate lien that you don't have to pay off until you sell, refinance, or pay off the mortgage. The most important thing is to keep in touch with your servicer and be honest about your situation.
Mortgage forbearance is easier to understand when it comes to taxes than many borrowers think, but there are some details that are worth knowing. In general, entering into forbearance does not create a taxable event because you are not getting money or having your debt forgiven; you are just putting off payments. But your mortgage interest deduction is a little more complicated. Most loans still accrue interest during forbearance, but you don't have to pay it. When you finally pay this accrued interest, whether it's all at once, in installments, or added to your loan balance, you can deduct it in the year you pay it, as long as you still itemize deductions and your mortgage qualifies. This is where it gets interesting: If you are patient and the lender agrees to change your loan terms so that they forgive part of your principal balance, that amount could be considered taxable income. The Mortgage Forgiveness Debt Relief Act and its later extensions, on the other hand, have made some exceptions for qualified principal residence debt in some cases. You should check with a tax professional to see if these rules are still in effect for 2025. Keep detailed records of all transactions related to forbearance, such as interest that has built up, changes to the principal, and payment schedules.
Yes, you can sell your house while you're in forbearance or right after, but you need to know how the process works and what it will cost you financially. When you sell during or after forbearance, you have to pay the missed payments and any interest that has built up from the sale before you get any money. Because your lender has a first lien on the property, they get paid first at closing. Let me show you how to do the math: You put off paying $12,000, added $800 in interest, and now you're selling your house for $350,000 with $230,000 left on your mortgage. Your lender gets the $230,000 principal and the $12,800 in forbearance amounts at closing. This adds up to $242,800. After paying real estate commissions, closing costs, and other fees, you get what's left. If you have a lot of equity, this could work out well. But if you're already underwater or have little equity, the forbearance amount could wipe out any profit. You can sell your home at any time, even if your lender is in forbearance. You don't need their permission to do so. But you should carefully go over the numbers with your real estate agent and figure out how much money you'll have left after paying all the costs, including the forbearance payoff.
These are two very different tools that are used for different things. Forbearance means that you are temporarily not making payments or making them smaller for a set amount of time. Your loan terms don't change, though. It's best for short-term problems when you think your money situation will get better in 6 to 12 months. You'll have to make up for missed payments in some way when forbearance ends. On the other hand, loan modification permanently changes the terms of your loan so that you can afford the payments over the long term. Your lender might lower your interest rate from 6.5% to 4.5%, extend your loan from 25 years to 30 or 40 years, or put some of your principal into a balloon that doesn't earn interest and is due at the end of the loan. Let's look at a real-life example: the original payment is $2,500 a month at 6.5% interest, with 20 years left and a balance of $270,000. If you change the interest rate to 4.0% over 30 years, your new payment might be $1,290, which is more than $1,000 less than what you were paying before. It all depends on your situation which one is better. If you lost your job but got a new one that pays about the same, forbearance makes sense. Modification is probably better if you took a permanent pay cut or are going to keep making less money. This is because it makes a payment that will last forever.
Borrowers are worried about this situation, but there are safeguards in place to make sure your forbearance goes smoothly even if your loan is sold or given to a new servicer. The new servicer must honor your current forbearance agreement when your loan servicing rights change hands. They can't cancel it or change the terms without your permission. The new servicer must follow the terms that the old servicer agreed to, according to federal law. Usually, you'll get a notice 15 days in advance that your service is moving. This notice will have the new servicer's phone number, the date of the transfer, and proof that your forbearance will continue without any breaks.
This is what you need to do:
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