Mortgage Forbearance vs Deferment 2026: Which Saves You More?
🆚 Forbearance vs Deferment: The Key Difference
Forbearance: Temporarily pause or reduce payments (3-12 months), then repay missed payments via lump sum, repayment plan, or loan modification.
Deferment: Move missed payments to the END of your loan term—no lump sum required, no payment increase, just extend your loan by the number of months deferred.
Struggling to make your mortgage payment? You have two main relief options: forbearance and deferment. But which one saves you more money and protects your credit?
According to the Mortgage Bankers Association (January 2026), over 2.1 million homeowners are currently in forbearance or deferment programs. Choosing the RIGHT option can save you $15,000-$30,000+ and help you avoid foreclosure. If you're struggling, compare lenders who specialize in hardship assistance.
📊 Quick Comparison: Forbearance vs Deferment
| Feature | Forbearance | Deferment |
|---|---|---|
| Duration | 3-12 months | Permanent (added to loan end) |
| Payment During | $0 or reduced | Resume normal payments |
| Repayment | Lump sum, plan, or modification | Added to loan end (no lump sum) |
| Credit Impact | Minimal if reported correctly | No negative impact |
| Best For | Temporary hardship (job loss, medical) | Post-forbearance solution |
| Qualification | Prove hardship | After forbearance ends |
🚨 Facing Financial Hardship? Get Expert Help
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📋 Complete Forbearance Process: Step-by-Step Guide
How to Request Mortgage Forbearance (10 Steps)
Step 1: Assess Your Financial Hardship (Day 1)
Document your hardship: job loss (unemployment letter), medical emergency (bills), reduced income (pay stubs), divorce (legal docs), or natural disaster (insurance claim). You'll need proof of hardship to qualify.
Step 2: Contact Your Loan Servicer Immediately (Day 1-2)
Call your servicer's loss mitigation department (NOT customer service). Say: "I'm experiencing financial hardship and need to request forbearance." Get representative's name and direct number. Don't wait until you miss a payment—request BEFORE you're late. If your servicer isn't helpful, explore refinancing options with other lenders.
Step 3: Submit Forbearance Request in Writing (Day 2-3)
Email or fax written request with: (1) Loan number, (2) Hardship explanation, (3) Requested forbearance duration (3-6 months), (4) Supporting documents. Keep confirmation email/fax receipt. Follow up in 48 hours if no response.
Step 4: Wait for Servicer Review (Day 3-10)
Servicer reviews your request (typically 5-10 business days). They verify hardship, check loan status, and determine eligibility. FHA/VA loans: Automatic approval if current before hardship. Conventional: May require more documentation.
Step 5: Receive Forbearance Agreement (Day 10-14)
Servicer sends forbearance agreement outlining: (1) Duration (3-6 months initial), (2) Payment amount ($0 or reduced), (3) Repayment options after forbearance, (4) Credit reporting terms. READ CAREFULLY before signing.
Step 6: Sign and Return Agreement (Day 14-15)
Sign agreement and return within 5 business days. Keep signed copy for your records. Forbearance starts on agreed date (usually next payment due date). Confirm start date in writing.
Step 7: During Forbearance - Stay in Contact (Months 1-6)
Check in monthly with servicer. Update them on financial situation. If situation improves, you can END forbearance early. If situation worsens, request extension BEFORE current period ends. Keep all communication documented.
Step 8: Request Extension if Needed (30 days before end)
If still in hardship, request extension 30 days before forbearance ends. FHA/VA: Up to 18 months total. Conventional: Up to 12 months. Provide updated hardship documentation. Extensions typically granted in 3-6 month increments.
Step 9: Choose Exit Strategy (60 days before end)
Servicer contacts you 60 days before forbearance ends to discuss repayment options: (1) Deferment (move to loan end), (2) Repayment plan (spread over 6-12 months), (3) Loan modification (reduce payment), or (4) Lump sum (pay all at once). Choose based on your financial recovery.
Step 10: Resume Payments or Implement Exit Plan (End date)
If choosing deferment: Missed payments moved to loan end, resume normal payments immediately. If repayment plan: Resume normal payment PLUS extra to repay missed payments over 6-12 months. If modification: New lower payment starts. If lump sum: Pay all missed payments at once.
🔄 4 Forbearance Exit Options: Complete Breakdown
Option 1: Deferment (Best for Most Borrowers)
How it works: Missed payments ($12,000-$36,000) moved to END of loan term. No lump sum required. No payment increase. Loan extends by number of months in forbearance. This is often the best exit strategy, and refinancing specialists can help you navigate the process.
Example: 6 months forbearance, missed $12,000 in payments. Deferment moves $12,000 to loan end. Resume $2,000/month payment immediately. Loan extends from 30 years to 30 years + 6 months.
Cost: $0 upfront. Extra interest over extended term: ~$8,640 on $12,000 deferred at 6% over 30 years. Total cost: $20,640 vs $12,000 if paid immediately.
Best for: Borrowers who can afford original payment but don't have lump sum. Planning to stay in home long-term. Want simplest exit with no payment shock.
Availability: FHA/VA automatic. Conventional: Lender discretion. Must be current before forbearance and able to resume payments.
Option 2: Repayment Plan (Good if Income Recovered)
How it works: Spread missed payments over 6-12 months. Pay original payment PLUS extra each month until caught up. If this seems unaffordable, compare lenders who offer loan modification programs.
Example: Missed $12,000 over 6 months. Repayment plan: Pay $2,000 (original) + $1,000 (catch-up) = $3,000/month for 12 months. After 12 months, back to $2,000/month.
Cost: $0 in fees. No additional interest (just original loan interest). Total repaid: Exactly $12,000 over 12 months.
Best for: Income fully recovered. Can afford 50% higher payment for 6-12 months. Want to avoid extending loan term. Planning to refinance or sell within 5 years.
Availability: All loan types. Must prove ability to afford higher payment (provide pay stubs, bank statements).
Option 3: Loan Modification (Best if Can't Afford Original Payment)
How it works: Permanently modify loan terms to reduce payment. Add missed payments to principal, extend term to 40 years, and/or reduce interest rate. Many homeowners find better options by refinancing to a lower rate instead of modifying.
Example: Original loan: $300K at 6% = $1,799/month. After modification: $312K principal (added $12K missed), 40-year term, 5.5% rate = $1,520/month. Payment reduced $279/month permanently.
Cost: $0-$500 modification fee. Pay more interest over 40 years vs 30 years. But monthly payment is LOWER, making it affordable.
Best for: Income permanently reduced (job change, disability). Can't afford original payment even after recovery. Need lower payment to avoid foreclosure. Planning to stay in home 10+ years. Before modifying, check if you qualify for refinancing to get a better rate.
Availability: FHA/VA: Easier approval. Conventional: Stricter requirements (must prove hardship, show financials, may require trial period).
Option 4: Lump Sum Payment (Fastest Exit, Hardest to Afford)
How it works: Pay all missed payments at once when forbearance ends. Resume normal payments immediately. No loan modification or extension.
Example: Missed $12,000 over 6 months. Pay $12,000 lump sum on forbearance end date. Resume $2,000/month payment next month. Loan returns to original terms.
Cost: $0 in fees. No additional interest. Total cost: Exactly $12,000 (just the missed payments).
Best for: Received lump sum (inheritance, bonus, settlement). Want to avoid extending loan or increasing payment. Have savings to cover missed payments. Want cleanest exit.
Availability: All loan types. No qualification needed—just pay the amount due.
💳 Credit Impact: Forbearance vs Deferment Detailed Analysis
How Forbearance Affects Your Credit Score
✅ CORRECT Reporting (No Credit Damage)
Under CARES Act provisions (extended through 2026), if you were current before forbearance, lender must report account as "current" during and after forbearance. This means your credit stays protected. After forbearance, many homeowners refinance to lower rates to reduce payments permanently.
- • No late payment marks
- • No delinquency reported
- • No credit score drop from forbearance itself
- • Account shows "current" status throughout
❌ INCORRECT Reporting (Can Damage Credit)
Some servicers incorrectly report forbearance as "delinquent" or "partial payment." This can drop your score 50-100 points. If this happens:
- • Dispute with credit bureaus immediately (Equifax, Experian, TransUnion)
- • Provide forbearance agreement as proof
- • File complaint with CFPB if not corrected within 30 days
- • Request "goodwill adjustment" letter from servicer
Credit Score Impact Timeline:
- • Month 1-6 (During Forbearance): No impact if reported correctly. Score may drop 5-10 points from increased credit utilization if using cards more.
- • Month 7-12 (After Forbearance): No impact if you resume payments on time. Score recovers if you had temporary dip.
- • Year 2+: Forbearance notation may appear on credit report but doesn't affect score. Lenders see it but understand it was COVID-related hardship.
How Deferment Affects Your Credit Score
Deferment has ZERO negative credit impact because:
- • You're resuming normal payments immediately
- • No late payments or delinquencies
- • Deferred amount added to loan end (not reported as debt increase)
- • Account remains "current" status
- • No notation on credit report about deferment
Key Insight: Deferment is invisible to credit bureaus. Your credit report shows continuous on-time payments with no gap or notation. This is why deferment is the preferred exit strategy for most borrowers. Once you've recovered financially, consider refinancing to a better rate to save even more.
❓ Frequently Asked Questions
What's the difference between mortgage forbearance and deferment?
Forbearance temporarily pauses or reduces payments (3-12 months), requiring repayment via lump sum, plan, or modification. Deferment moves missed payments to the END of your loan—no lump sum, no payment increase, just extends loan term. Deferment is typically offered AFTER forbearance ends.
Which is better: forbearance or deferment?
Deferment is usually better because it requires no lump sum repayment and doesn't increase your monthly payment. However, you typically need to complete forbearance first, then request deferment. If you can afford payments now, skip both and stay current to avoid extending your loan term.
Does forbearance or deferment hurt your credit score?
Neither should hurt your credit if reported correctly. Under CARES Act provisions (extended through 2026), lenders must report forbearance accounts as "current" if you were current before forbearance. Deferment has no negative credit impact. However, always verify with your lender and check your credit report.
How long can I stay in mortgage forbearance?
Initial forbearance: 3-6 months. Extensions available up to 12-18 months total depending on loan type. FHA/VA loans offer up to 18 months. Conventional loans typically 12 months. You must request extensions before current forbearance period ends.
Can I get deferment without doing forbearance first?
Usually no. Deferment is typically offered as an EXIT option after forbearance ends. However, some lenders offer "partial claim" or "COVID-19 deferment" programs that allow immediate deferment for specific hardships. Contact your servicer to ask about all available options.
Do I have to pay back forbearance in a lump sum?
No! You have 4 repayment options: (1) Lump sum (pay all at once), (2) Repayment plan (spread over 6-12 months), (3) Loan modification (add to principal, extend term), or (4) Deferment (move to loan end). Most borrowers choose deferment or modification to avoid lump sum.
How much does deferment cost?
Deferment typically costs $0 in fees, but you'll pay more interest over the life of your loan because you're extending the term. Example: Defer 6 months of $2,000 payments ($12,000) on a 30-year loan at 6% = pay extra $8,640 in interest over extended term. Total cost: $20,640 vs $12,000 if paid immediately.
Can I sell my house while in forbearance or deferment?
Yes, but you must pay back deferred amount at closing. When you sell, the deferred balance (plus any accrued interest) is due from sale proceeds. If you have enough equity, this is no problem. If underwater, you may need lender approval for short sale.
What happens if I can't afford payments after forbearance ends?
You have options: (1) Request deferment (move payments to loan end), (2) Apply for loan modification (reduce payment permanently), (3) Refinance to lower rate/payment, (4) Sell home if you have equity, or (5) Deed-in-lieu/short sale as last resort. Contact your servicer BEFORE forbearance ends to discuss options.
Is forbearance or deferment better for my credit score?
Both should have minimal impact if reported correctly. Forbearance is reported as "current" under CARES Act provisions. Deferment has no negative impact because you're resuming normal payments. The key is to avoid missing payments AFTER forbearance/deferment ends, which would severely damage credit (30+ days late = -100 points).
🏆 Ready to Explore Your Options?
Connect with mortgage specialists who can help you choose between forbearance, deferment, modification, or refinance. Get personalized advice for your financial situation.
Get Expert Mortgage Help →✓ Free consultation ✓ Hardship specialists ✓ Avoid foreclosure ✓ Protect credit