Look, here's the deal. When you're staring at a mortgage payment you can't make, the panic sets in fast. I've talked to hundreds of borrowers in Dallas-Fort Worth and across my 37 states of licensure who thought they were headed straight to foreclosure, when really they had options they didn't even know existed.
Mortgage forbearance and deferment are two of those options, and they're not the same thing—though most people use the terms interchangeably. Understanding the difference could save your home and your credit, so let's break this down in plain English.
Forbearance is essentially hitting the pause button on your mortgage payments. Your servicer agrees to temporarily reduce or suspend your monthly payment for a specific period, usually between three and six months.
But here's what drives me crazy: forbearance isn't payment forgiveness. You're not getting out of anything. Your buying time.
According to the Consumer Financial Protection Bureau, forbearance is designed for homeowners dealing with temporary financial hardship. The keyword here is temporary. Think job loss, major medical event, natural disaster, or other short-term income disruptions.
The Mortgage Bankers Association reported in April 2025 that only 0.36% of mortgages were in active forbearance as of March 2025—that's about 180,000 homeowners nationwide. Compare that to the peak of 7% (roughly 3.4 million mortgages) during the COVID-19 pandemic in May 2020, and you can see forbearance is now being used much more selectively.
Here's where it gets interesting. If you have a federally-backed mortgage—and about 75% of all mortgages fall into this category—you have stronger forbearance protections under programs established during the CARES Act that continue in modified form today.
For federally-backed loans (FHA, VA, USDA, Fannie Mae, Freddie Mac), servicers must offer forbearance options when you request them due to financial hardship. According to MBA data from March 2025, 76% of current borrowers in forbearance are there due to temporary hardships like job loss, death, divorce, or disability.
If you're working with a lender, make sure they explain what specific programs apply to your loan type. Each program has different rules, and understanding which protections you have makes a huge difference when you're under stress.
Between you and me, forbearance isn't free money. You're deferring a problem, not solving it.
When your forbearance period ends, you'll need a plan to repay those missed payments. The CFPB notes that average expected repayment amounts for borrowers in extended forbearances reached $8,300 as of February 2021.
Your servicer will contact you about 30 days before your forbearance ends to discuss repayment options, which might include:
Repayment Plans: You make higher monthly payments for a set period until you've caught up. This works if your income has stabilized and you can afford the extra amount.
Loan Modification: Your servicer permanently changes your loan terms—potentially extending the loan term, reducing the interest rate, or capitalizing the missed payments into your principal balance.
Deferment or Partial Claim: Your missed payments get moved to the end of your loan or into a separate junior lien (more on this in the next section).
Lump Sum Reinstatement: You pay back everything you owe at once. For most government-backed loans, servicers cannot require this option, but some borrowers choose it if they receive a windfall like an insurance payout or tax refund.
Okay, real talk for a second. Deferment is often what happens after forbearance, though you can sometimes go straight to deferment if you've missed payments but can now resume your regular monthly payment.
With payment deferment, your servicer takes all those past-due amounts—including missed principal and interest, late fees, and any servicer advances—and moves them to the very end of your loan term. Your regular monthly payment stays exactly the same.
You just owe that deferred balance when you eventually sell the home, refinance, or pay off the mortgage.
Think of it like this: if you had 25 years left on your mortgage and deferred $12,000 in missed payments, you'd resume your normal payment right away, but that $12,000 becomes due in 25 years when the loan matures.
The Federal Housing Finance Agency announced in March 2023 that Fannie Mae and Freddie Mac would expand payment deferrals beyond COVID-19 hardships to cover other eligible financial difficulties. This became mandatory for servicers by October 1, 2023.
According to Fannie Mae's servicing guidelines, borrowers can now defer up to six months of past-due principal and interest payments. However, there's a lifetime limit of 12 months of cumulative deferred payments per loan.
FHA Partial Claims: For FHA-insured loans, partial claims work similarly but with a twist. According to HUD guidelines updated in 2024, servicers can use partial claim funds equal to up to 30% of your unpaid principal balance to bring your loan current.
This creates a zero-interest, no-fee junior lien on your property that becomes payable when you sell, refinance, or your mortgage terminates.
Not gonna lie, partial claims are one of the better deals out there for FHA borrowers. You can actually receive multiple partial claims over the life of your loan, as long as the combined total doesn't exceed that 30% threshold. If you're considering an FHA loan and wondering about built-in protections, this partial claim option is one of the program's strongest safety nets.
VA and USDA Deferrals: Both VA-guaranteed loans and USDA Rural Housing loans offer similar deferment options. USDA guidelines specify that servicers should offer affordable repayment plans or term extensions to defer missed payments to the end of the loan when borrowers can resume regular payments.
New FHA Payment Supplement Program: Here's something most borrowers don't know about yet. In February 2024, FHA introduced a Payment Supplement option that became mandatory for servicers by January 2025.
This program uses partial claim funds to bring your loan current AND provides a monthly principal reduction for 36 months to temporarily lower your payment—without requiring a full loan modification.
Bottom line? Deferment extends the time you'll be paying your mortgage, even though your regular monthly payment doesn't change. Let me paint you a picture with real numbers.
Example Calculation:
Most borrowers end up paying off deferred balances earlier through refinancing or home sale, which reduces total interest cost. When that time comes, shop around for the best refinance rates and make sure you understand how your deferred balance affects the new loan's numbers.
So I was talking to a borrower yesterday who thought forbearance and deferment were the same thing with different names. Here's where these options actually diverge:
Timing
Forbearance: Used first during active hardship
Deferment: Often follows forbearance; can be standalone
Monthly Payment Impact
Forbearance: Reduces or eliminates payment temporarily
Deferment: Keeps payment the same; defers past-due to end
Duration
Forbearance: Reduces or eliminates payment temporarily
Deferment: Keeps payment the same; defers past-due to end
Documentation
Forbearance: Proof of hardship usually required
Deferment: Minimal if exiting forbearance
Credit Reporting
Forbearance: Varies; CARES Act forbearances reported as current
Deferment: Deferred balance doesn't directly impact score
Interest Accrual
Forbearance: Continues on full balance during forbearance
Deferment: Deferred amount may be non-interest (FHA) or at existing rate
Loan Modification Required
Forbearance: No—temporary arrangement
Deferment: Yes—new agreement documenting structure
1. Timing of Use - Forbearance comes first, typically when you're actively struggling to make payments. Deferment often follows forbearance as an exit strategy, though it can occasionally be used independently if you've missed 3-6 payments but can now resume paying.
2. Impact on Monthly Payments - Forbearance reduces or eliminates your monthly payment temporarily. Deferment keeps your monthly payment at the same amount—you're just pushing the missed payments to later.
4. Documentation Requirements - Forbearance usually requires you to prove financial hardship—job loss documentation, medical bills, disaster declarations. Deferment typically doesn't require new hardship documentation if you're exiting a forbearance plan.
5. Credit Reporting - If you were current when you entered CARES Act forbearance, servicers were required to report your account as current during the forbearance period. For non-CARES forbearances, reporting requirements vary.
6. Interest Accrual - During forbearance, interest continues to accrue on your loan balance, even though you're not making payments. With deferment, the deferred amount becomes a separate balance that's due later.
7. Loan Modification Required? - Forbearance is temporary and doesn't change your loan terms permanently. Deferment typically requires some form of loan modification or subordinate lien agreement to legally document the new payment structure.
And here's where it gets interesting. Mortgage servicers can't just pick whatever option they want. For government-backed loans, they must follow what's called a "loss mitigation waterfall"—a specific order of solutions they're required to evaluate.
For FHA loans, according to HUD's Single Family Housing Policy Handbook 4000.1, the waterfall looks like this:
Your servicer can't skip ahead to foreclosure if you qualify for earlier options in the waterfall. This protection is huge and most homeowners don't know they have it.
Marina Walsh, CMB and Vice President of Industry Analysis at MBA, noted in the March 2025 report that "more borrowers in loan workouts—particularly those with FHA loans—are having difficulty staying current," which highlights why understanding these options matters.
When you call your servicer, ask them specifically where you fall in the waterfall. They should be able to tell you which options they've evaluated and why they're recommending a particular solution. Don't be afraid to ask questions until you understand exactly what they're offering.
Look, I get it. This stuff is hard. But I'd be doing you a disservice if I didn't mention when these options might not be your best move.
In these scenarios, you might need to consider a loan modification, short sale, or even deed-in-lieu of foreclosure. These are harder conversations, but sometimes necessary ones. Working with a HUD-approved housing counselor can help you think through all the angles objectively.
Here's my challenge to you: don't let fear of credit damage prevent you from seeking help. Yes, forbearance and deferment can affect your credit, but the impact is typically much less severe than foreclosure.
A 2023 CFPB analysis using the National Mortgage Database found that most borrowers who were in forbearance in March 2021 were current on their mortgages by March 2023. Black and Hispanic borrowers in forbearance were just as likely as white borrowers to be current by that date.
According to MBA's March 2025 data, 67.83% of completed loan workouts from 2020 onward remained current—that's borrowers who used repayment plans, deferrals, partial claims, and modifications. This success rate demonstrates that these tools work when used appropriately.
During CARES Act forbearance specifically, if you were current or less than 30 days delinquent when you entered forbearance, your servicer was required to report your account as current throughout the forbearance period. This protection helped millions of borrowers preserve their credit during the pandemic.
The mortgage relief landscape has shifted significantly since the pandemic. Several COVID-era programs sunsetted in 2025, while new permanent options are emerging.
Ending September 30, 2025:
These changes reflect the industry's recognition that financial hardship didn't end with the pandemic. If you're shopping for a new mortgage, ask potential lenders how they handle loss mitigation and what programs they offer beyond the federal minimums. Some lenders go above and beyond the requirements.
Okay, real talk for a second. Calling your mortgage servicer can feel like calling the principal's office. But I promise you, they've heard it all. And waiting only makes things worse.
The moment you realize you might miss a payment—not after you've already missed it—contact your servicer. Your monthly mortgage statement shows their contact information.
Keep records of every conversation: dates, times, names of representatives, confirmation numbers. Email is your friend here. If you discuss something over the phone, follow up with an email summarizing what was said.
Be ready to provide recent pay stubs, bank statements (usually last 2 months), details about other income sources, explanation of your hardship, and monthly budget showing income and expenses.
Not gonna lie, you need to be your own advocate here. Ask what forbearance terms are available, how this will appear on your credit report, what repayment options exist when forbearance ends, whether you're eligible for deferment or partial claim, if you'll be charged any fees, and how long the application process takes.
The CFPB offers a free "Find a Counselor" tool on their website to locate HUD-approved housing counseling agencies in your area. These counselors can help you understand your options at no cost to you. They're not connected to any lender, so they can give you unbiased advice.
Before agreeing to any forbearance or deferment plan, insist on receiving the terms in writing. Review every document carefully. If something doesn't match what you discussed, call back before you sign anything.
Let me paint you a picture of three borrowers I've worked with (details changed for privacy):
Sarah lost her job in March 2025 but secured new employment starting in July. She entered a 4-month forbearance on her conventional Fannie Mae loan. When her forbearance ended, she qualified for a payment deferral, moving $6,800 in missed payments to the end of her 18-year remaining loan term.
Best option: Forbearance followed by payment deferral. Temporary hardship with clear end date, ability to resume full payments, government-backed loan with strong deferral options.
David incurred $45,000 in medical bills after an accident. His FHA loan payment was $1,250 monthly. He missed 5 months of payments. His servicer used an FHA standalone partial claim to create a zero-interest junior lien for $6,250.
Best option: Direct to partial claim deferment. FHA loan qualifies for zero-interest junior lien, borrower can afford regular payment, avoids interest accrual on deferred amount.
Michelle's home was affected by Texas floods in July 2025. She qualified for the FHA 90-day foreclosure moratorium and entered forbearance while rebuilding. After 6 months, she got a disaster payment deferral that moved $7,800 to the end of her loan.
Best option: Disaster forbearance followed by disaster payment deferral. Presidentially-declared disaster provides extended protections, special deferral options available.
What's the bottom line? There are ways to deal with mortgage payments if you're having trouble, but only if you act quickly. Since the start of the pandemic, mortgage servicers have given about 8.6 million forbearances. Most of the borrowers who worked with their servicers were able to avoid foreclosure.
Forbearance and deferment aren't the best answers. They're short-term tools that can help you get through a financial storm without losing your home. It's important to know which tool works best for you and how to use it wisely.
Don't let fear or pride stop you from reaching out. It's in everyone's best interest for your servicer to work with you on forbearance or deferment instead of going through foreclosure. The numbers show that 67.83% of borrowers who have done loss mitigation workouts since 2020 are still current on their mortgages.
Your home is probably your biggest investment and the place where your family lives, so at the end of the day (ugh, I hate that phrase but it fits here), it's important to protect it. To keep it safe, you need to be aware, take action, and be willing to ask for help when you need it. Act quickly, before you fall behind on several payments and your choices become fewer.
It depends on your situation how your credit will be affected. If you entered CARES Act forbearance while still making payments, your servicer had to report your account as current during the forbearance period. This means that the forbearance itself did not hurt your credit score. The effects of other forbearances are different. If you were already behind on payments before you entered forbearance, those missed payments would have already hurt your credit. Deferment itself doesn't hurt your credit score directly because it's a way to pay back a loan, not a late payment. But any late payments you made before the deferment will stay on your credit report for seven years. Your credit report will show that you have forbearance or deferment, which could affect future lenders' decisions to lend you money. However, this is not as bad as foreclosure. CFPB research shows that most borrowers who used forbearance during COVID-19 kept their credit profiles and stayed current on their mortgages by 2023.
Yes, but you have to wait and meet certain requirements. Most lenders will only let you refinance after you make a certain number of on-time payments in a row after forbearance ends. This usually takes three to twelve months, depending on the loan program and lender rules. If you want to refinance a Fannie Mae or Freddie Mac loan, you usually have to make at least three months of on-time payments after the forbearance period ends. Having a deferred balance at the end of your loan will limit your refinancing options. When refinancing, the subordinate lien must be paid off or moved down in the FHA partial claim. Some cash-out refinances might take longer to process. The exact requirements depend on what kind of loan you are getting, such as a conventional, FHA, VA, or other type. The best thing to do is to talk to a mortgage expert who can look over your specific timeline and tell you exactly when you'll be able to refinance. Some lenders are more flexible with post-forbearance rules than others, so look at offers from more than one lender.
Your servicer must help you come up with exit plans before your forbearance period ends. They usually call you about 30 days before the end date to talk about your options. You shouldn't have to face foreclosure right away if you can't afford to start making your full monthly payments again. Your servicer must instead look at other ways to help you avoid losing your home in their waterfall sequence. These could include loan modification to permanently lower your payment by extending the term or lowering the interest rate, payment deferral or partial claim if you can afford your regular payment but not the catch-up amount, or a repayment plan if you can afford slightly higher payments for a while. Your servicer would only think about liquidation options like short sale or deed-in-lieu of foreclosure if you didn't qualify for any home retention options. The most important thing is to talk to your servicer before your forbearance ends. The MBA says that 67.83% of borrowers who completed workout solutions are still current, which shows that these programs work when borrowers are involved. Don't ignore the calls from your servicer.
Yes, there are limits, but they depend on the type of loan and the program. You can usually ask for more forbearance extensions if you are still having trouble, but servicers don't have to give you as many as you want. Borrowers could get up to 360 days of forbearance under the CARES Act. There are total limits on payment deferrals. The total amount of deferred payments on a Fannie Mae or Freddie Mac loan cannot be more than 12 months over the life of the loan. If you've already put off 6 months of payments and need to do it again, you can only put off 6 more months. You can get more than one FHA partial claim, but the total of all of them can't be more than 30% of your unpaid principal balance. There are also time limits. In most cases, you can only get one permanent loss mitigation option every 24 months, unless a major disaster is declared by the president. These limits are in place to stop people from taking advantage of the programs while still giving borrowers who are having a lot of trouble with their loans real help.
Your escrow account for property taxes and insurance will still work during forbearance, but there will be some changes. While you're in forbearance, you still have to pay your property taxes and homeowners insurance, even though you're not making full mortgage payments. Your servicer usually pays these bills from your escrow account as they come due. This can cause an escrow shortage. When your forbearance ends, you may need to deal with this shortage by making an escrow payment deferral that adds the shortage to the end of your loan, along with your mortgage payment deferral; a repayment plan that spreads the escrow shortage over several months; or a lump-sum payment to bring escrow up to date. When you talk to your servicer about your forbearance exit plan, they should talk about the escrow situation. For payment deferrals, your escrow should stay up to date since you're going back to your regular monthly payment right away. However, any shortfall from the forbearance period needs to be fixed. To avoid being surprised by extra amounts owed, ask your servicer exactly how they handle escrow during and after forbearance.
First, find out why your request was turned down. If you said you were having trouble because of COVID-19, servicers had to give you forbearance on federally-backed loans under the CARES Act. Servicers have more freedom when it comes to non-CARES forbearances, and they may turn down requests that don't meet their hardship criteria. If your request is denied, you have a few options: you can ask for a detailed written explanation of why your request was denied and what paperwork might help, ask to speak with a supervisor or specialized team that handles loss mitigation, get in touch with a HUD-approved housing counselor who can speak up for you, send in more proof of your hardship if that was the reason for denial, or file a complaint with the Consumer Financial Protection Bureau if you think your servicer broke federal servicing rules. You can file a complaint with the CFPB online, and they will send it to your servicer, who has 15 days to respond. Don't give up after being turned down the first time. Many borrowers win appeals when they send in more paperwork or get help from housing counselors who know what servicers need to see.
Forbearance means that you get a break from making payments for a while. You stop or lower your payments for a set amount of time, but the terms of your loan don't change permanently. When forbearance ends, you have to start making your original payments again and come up with a plan for how to make up the missed ones. A loan modification changes one or more terms of your mortgage for good, usually your interest rate, loan term, or principal balance. This makes your payments easier to make in the long run. The main differences are that forbearance is easier to get and takes less paperwork, while modification takes longer but gives you permanent relief. Forbearance is only temporary, while modification is permanent. Forbearance doesn't change your interest rate or loan term, but modification can change both. Forbearance assumes your hardship is temporary, while modification assumes your financial situation has changed for the long term. It all depends on your situation which is better. If you plan to start making full payments again soon, use forbearance. If your income has permanently dropped, your payment was already too high before the hardship, or you've been having trouble making payments for a long time, choose modification. A lot of borrowers use both. Forbearance gives them immediate relief while the servicer processes a modification application, which can take 30 to 90 days.
Not for most loans backed by the government. This is one of the most common misunderstandings about forbearance, and it keeps many borrowers from getting the help they need. Servicers cannot require a lump-sum payment at the end of forbearance for loans backed by Fannie Mae, Freddie Mac, FHA, VA, or USDA. Instead, they must offer you other ways to pay back the loan. Your servicer should give you a few options for getting out of your loan based on your financial situation. These could include payment deferral, which moves the missed amount to the end of your loan without raising your monthly payment; a repayment plan, which adds a portion of the missed payments to your regular payment for several months; a loan modification, which permanently restructures your loan to make payments more affordable; or a partial claim for FHA loans, which creates a separate zero-interest junior lien for the missed payments. You would only make a lump-sum payment if you actively chose to reinstate, which is usually when borrowers get insurance money, tax refunds, or other windfalls. When it comes to private loans that aren't backed by the government, the rules for paying them back in one lump sum vary from servicer to servicer. But if your mortgage is federally backed, which is the case for 75% of them, you will have other options besides paying it all back at once.
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