Can’t Pay Mortgage Due to COVID? Here are some options


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Many people are struggling to pay their bills due to the COVID-19 pandemic. But luckily, as a homeowner, there are several options you can use to apply for financial relief and avoid foreclosure.

Lenders are ready to help you get through these uncertain times, but you should contact them as soon as you are concerned that you may not be able to make your mortgage payment.

Here are some of the ways you can get help with housing costs in times of economic hardship:

Check your mortgage type

Your COVID-19 mortgage relief options depend on the type of mortgage you have. The most common types of mortgages include:

These loans generally offer the most options for assistance if you are behind on mortgage payments.

If you have a compliant conventional loan, Fannie Mae and Freddie Mac offer several mortgage relief options for qualified homeowners affected by the coronavirus, including a forbearance plan and a loan modification.

Non-conforming loans, like jumbo loans and government guaranteed loans, may have less financial protections since Fannie Mae and Freddie Mac do not guarantee these loans. If you have any of the loans, contact your loan manager to review your options for assistance.

Advice: Mortgage officers can ask for proof of hardship if you are seeking a loan modification, but they generally cannot require you to provide proof of hardship to go into forbearance due to COVID-19.


When your loan manager approves mortgage forbearance, you have permission to stop making monthly payments or temporarily reduce your monthly payment. However, mortgage forbearance does not cancel payments – you will still have to repay principal and deferred interest after the forbearance ends.

However, you can now request up to six months of initial forbearance until the nationally declared emergency for FHA, USDA, and VA loans has ended. You can also request an additional six-month forbearance if the pandemic is not over by the time your initial forbearance expires.

If you requested an abstention between July 1, 2021 and September 30, 2021, you can also request an additional six-month abstention.

Home loans held by Freddie Mac and Fannie Mae also have an open application window.

Most lenders only issue an initial six-month forbearance period. Then, if you need further help, you can apply for an extension of forbearance in increments of three or six months until you are inactive for 12 months.

At the end of the abstention, you will have to repay the amount that you carried forward. Your reimbursement options may include:

  • Reinstatement: This is when you repay the full amount of the deferral in one go. Lenders cannot demand this repayment option when they claim coronavirus-related hardship through the CARES Act, but can do so for traditional forbearance requests.
  • Repayment plan: You may be able to update your mortgage by entering a repayment plan and making additional monthly payments for 12 months after forbearance. Once your mortgage is outstanding again, your monthly payment will return to its normal amount.
  • Postpone payments until the end of the loan: Another option is to delay the forbearance payments and repay them when the mortgage ends. As long as you stay in debt longer, you will have more time to pay it off and your monthly payment will not increase.
Advice: Your abstention period can last up to 12 months. Single-family and multi-family properties are eligible. Forbearance isn’t limited to first mortgages either – you may also qualify for it on your second mortgage.


The passage of the CARES law in March 2020 provided several financial assistance programs for individuals. For example, this legislation paved the way for the first stimulus checks.

There are also several mortgage assistance benefits linked to the coronavirus:

  • Mortgage abstention: It is easier for homeowners to qualify for forbearance for up to 12 months. There is currently no application deadline for conventional or government guaranteed mortgages.
  • Moratorium of seizure: Lenders were prohibited from starting the foreclosure process before July 31, 2021. Although this moratorium has expired, most mortgage agents will not begin foreclosure until January 1, 2022 or later.
  • Moratorium on evictions: The federal moratorium on evictions expired on August 26, 2021, following a Supreme Court ruling. Landlords must provide tenants with a 30 day eviction notice.

Currently, only the mortgage forbearance guarantee remains active for most homeowners.

Emergency rental assistance

Many states and cities offer emergency rental assistance programs. These programs can help you pay rent or cover utility costs.

You can search for local programs with the Consumer Financial Protection Bureau.

If you own a rental property, many programs also accept landlord applications. Being able to collect up to 18 months of unpaid rent can help you pay off your mortgage on investment property.

Mortgage modification

You may prefer to ask your lender to modify your existing loan if you want to continue making payments and avoid the refinancing process.

A loan modification permanently adjusts the terms of your mortgage. The main benefits of a loan modification include:

  • Lower monthly payment: Your lender can lower your monthly payment (while keeping your interest rate at the same level) by extending the term of your loan. You will pay more interest in the long run with this option, but it can give you more wiggle room in your monthly budget.
  • Reduced interest rate: Your lender may offer a new interest rate if it is lower than your current rate. This can drastically reduce your monthly payment.
  • Switch to a fixed interest rate: Your lender may recommend that you switch from an adjustable rate mortgage to a fixed rate mortgage so that you have a stable monthly payment for the life of your loan.

Loan assistance

Your state may also offer homeowner financial assistance, and you may be eligible for these programs even if your mortgage is already on hold.

Many states receive funds from the U.S. Department of the Treasury’s Hardest Hit Fund to help you when you can’t pay the mortgage due to COVID-19. Oregon, for example, offers a five-year forgivable loan with its COVID-19 mortgage assistance program. If you are currently receiving unemployment benefits, your funds can help you keep your mortgage up to date and cover up to six additional payments.

Some local towns also offer mortgage assistance programs. For example, homeowners in the city of Chicago with low or moderate income can receive up to $ 3,300 in assistance.

Advice: Most city and state loan assistance programs have limited funds. If you need help, it is best to apply as soon as possible as you have a higher likelihood of getting help.

Talk to a housing counselor

If you can’t keep up with your mortgage payments and are facing foreclosure, consider speaking with a HUD-approved housing counselor.

This service is often provided free of charge, and the advisor can help you review your repayment options to avoid foreclosure. To find a foreclosure prevention advisor, use this US Department of Housing and Urban Development search tool.

You can also contact your mortgage agent to review your personalized choices.

Refinance your mortgage

Mortgage refinancing may not be the most practical option when you can’t pay your mortgage due to COVID. Mortgage forbearance and other assistance programs can provide immediate assistance and you won’t have to worry about paying high closing costs.

However, refinancing is an option to consider after your pandemic forbearance period has ended and you want to change the terms of your mortgage. To do this, your loan will need to be up to date and your lender may have a minimum waiting period if you are just coming out of forbearance or other assistance program.

Good to know: In most cases, you may be eligible for standard refinancing after three post-forbearance payments. After that, it is possible to reduce your monthly payment, your interest rate, or both.

Depending on your situation, you may have to wait at least 12 months. However, it may be easier to waive this requirement when reporting COVID-19 hardship.

If you think refinancing is the right decision, Credible makes the process easier. You can compare multiple lenders and view prequalified refinance rates in as little as three minutes without leaving our site.

Find out if refinancing is right for you
  • Real rates from several lenders – In 3 minutes, get real prequalified rates without impacting your credit score.
  • Smart technology – We streamline the questions you need to answer and automate the document upload process.
  • End-to-end experience – Complete the entire creation process, from price comparison to closing, all on Credible.

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About the Author

Josh Patoka

Josh Patoka is an authority on personal finance and a contributor to Credible. His work has been published on Fox Business and several award-winning personal finance blogs, including Well Kept Wallet, Wallet Hacks, and Frugal Rules.

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