Loan Products · June 30, 2025
What Is Mortgage Forbearance and How Does It Affect Refinancing?
Mortgage forbearance helps borrowers through hardship — but it affects your ability to refinance afterward. Here is everything you need to know.
Mortgage forbearance is an agreement between you and your servicer that temporarily pauses or reduces your mortgage payments during a period of financial hardship.
How Forbearance Works
During the COVID-19 pandemic, the CARES Act allowed borrowers with federally-backed loans (FHA, VA, USDA, Fannie/Freddie) to enter forbearance for up to 18 months. Non-federally-backed loans offered forbearance at individual servicer discretion.
During forbearance: you make reduced or no payments. Payments are not forgiven — they are deferred to be paid later (through repayment plan, loan modification, or added to the end of the loan).
How Forbearance Affects Credit
If handled correctly, forbearance does not negatively impact your credit score. The CARES Act required servicers to report accounts in forbearance as current (not delinquent).
However: missed payments before entering forbearance, or missed payments after forbearance without a proper exit plan, do appear as delinquent.
How Forbearance Affects Refinancing
This is the critical issue: most refinance programs require you to be current on your mortgage with no recent forbearance. Specific waiting periods vary:
Conventional (Fannie/Freddie): Must have made 3 consecutive on-time payments after forbearance ends. Some programs require the loan to be fully reinstated.
FHA: Must have made 3 consecutive on-time payments after forbearance. FHA Streamline requires 12 months of on-time payments.
VA: Must have made 12 consecutive on-time payments if the forbearance resulted in missed payments.
The Bottom Line
If you entered forbearance and want to refinance, check your specific loan status and servicer requirements. HMS works with borrowers navigating post-forbearance refinancing. Call 309-222-8286.