A comprehensive guide to mortgage forbearance guide from NMHL mortgage experts.
NMHL Editorial Team2026-02-188 min read
<p>Mortgage forbearance is not a one‑size‑fits‑all solution. The mechanics differ based on loan type, lender policies, and the specific hardship you’re experiencing. Below we break down the core components you need to know.</p>
<h3>Accrual of Interest</h3>
<p>For most conventional loans, interest continues to accrue during the forbearance period. On a $250,000 loan at 4.0% interest, a six‑month forbearance adds roughly $5,000 to the principal. Understanding this helps you budget for the eventual repayment.</p>
<h3>Principal vs. Interest‑Only Forbearance</h3>
<p>Some lenders allow <strong>interest‑only</strong> forbearance, where you pay only the accrued interest each month. This keeps the principal balance from growing, but you must still have the cash flow to cover the interest amount.</p>
<h3>Impact on Escrow Accounts</h3>
<p>Escrow accounts that cover property taxes and homeowners insurance may be frozen during forbearance. If taxes or insurance premiums become due, you’ll need to arrange separate payments to avoid tax liens or coverage lapses.</p>
<p>NMHL’s <strong>Forbearance Tracker</strong> tool lets you monitor how much interest is adding to your balance in real time, giving you a clear picture of the financial impact.</p>
<p>Eligibility is the first gatekeeper. While each lender has its own guidelines, NMHL follows a transparent framework that balances compassion with fiscal responsibility.</p>
<h3>Financial Hardship Definition</h3>
<p>NMHL defines hardship as any event that reduces your net monthly income by at least 30% for a minimum of 60 days. Common examples include:</p>
<ul>
<li>Job loss or reduced hours (evidence: unemployment claim, recent pay stubs).</li>
<li>Medical expenses exceeding 20% of monthly income (evidence: hospital bills, physician statements).</li>
<li>Natural disaster damage (evidence: insurance claim, FEMA assistance letters).</li>
</ul>
<h3>Credit Score Thresholds</h3>
<p>Our <strong>Forbearance Ready</strong> program accepts borrowers with credit scores as low as 580, provided they meet the hardship criteria. Traditional forbearance programs often require a minimum score of 620.</p>
<h3>Required Documentation Checklist</h3>
<ol>
<li>Proof of income (last 2 pay stubs, 2023 tax return).</li>
<li>Hardship verification (unemployment benefits letter, medical bills, or disaster assistance notice).</li>
<li>Current mortgage statement.</li>
<li>Identification (driver’s license or passport).</li>
</ol>
<p>Submitting a complete packet reduces processing time from an average of 14 days to just 5 days with NMHL.</p>
<p>Applying for forbearance can feel overwhelming, but breaking it into manageable steps makes the journey smoother.</p>
<h3>Step 1: Self‑Assessment</h3>
<p>Calculate your monthly net income and compare it to your total housing costs (principal, interest, taxes, insurance). If the ratio exceeds 30%, you likely qualify for forbearance.</p>
<h3>Step 2: Contact NMHL</h3>
<p>Call our dedicated line at 1‑800‑555‑FORB (3672) or submit an online request through the <a href="/resources/tools/forbearance-request" target="_blank">Forbearance Request Form</a>. Our loan officers will assign a case manager within 24 hours.</p>
<h3>Step 3: Gather Documentation</h3>
<p>Use the checklist above. Upload files securely via the NMHL portal; the system encrypts data with AES‑256 encryption.</p>
<h3>Step 4: Review the Agreement</h3>
<p>NMHL will provide a written agreement outlining:</p>
<ul>
<li>Start and end dates.</li>
<li>Payment amount (full pause, partial, or interest‑only).</li>
<li>Accrual rate of interest.</li>
<li>Post‑forbearance repayment options.</li>
</ul>
<h3>Step 5: Confirmation</h3>
<p>Sign electronically and keep a copy for your records. Your forbearance becomes effective on the date specified, typically within 5 business days of signing.</p>
<p>Throughout the process, NMHL’s <strong>Forbearance Concierge</strong> provides weekly check‑ins to ensure you understand each milestone.</p>
<p>When the forbearance window closes, you’ll need a clear plan to address the accrued balance. NMHL offers three primary pathways, each with its own pros and cons.</p>
<h3>1. Structured Repayment Plan</h3>
<p>Spread the missed amount over 12–24 months. For a $3,000 missed balance, a 12‑month plan adds $250 to each monthly payment. This option keeps your original loan term intact.</p>
<h3>2. Loan Modification</h3>
<p>Extend the loan term by up to 5 years, reducing the monthly payment. Using the same $3,000 example, extending a 30‑year loan to 35 years could lower your payment by $30‑$40 per month, depending on interest rates.</p>
<h3>3. Deferral to End of Term</h3>
<p>Push the missed balance to the final years of the loan. This increases the total interest paid but avoids higher monthly payments now.</p>
<p>NMHL’s <strong>Re‑Start</strong> program can combine a loan modification with a reduced closing cost, making the transition smoother for borrowers who have completed a forbearance successfully.</p>
<p>Forbearance is a safety net, not a long‑term solution. Building resilience now can protect you from future hardships.</p>
<h3>Emergency Savings Fund</h3>
<p>Aim to save three to six months of housing costs. For a homeowner with a $1,800 monthly payment, a $5,400–$10,800 emergency fund is ideal.</p>
<h3>Budget Review</h3>
<p>Use NMHL’s free <a href="/resources/tools/budget-planner" target="_blank">Budget Planner</a> to track discretionary spending and identify areas to cut.</p>
<h3>Insurance Coverage</h3>
<p>Ensure you have adequate homeowners, flood, and disability insurance. A comprehensive policy can prevent unexpected expenses from turning into a hardship.</p>
<h3>Regular Mortgage Check‑Ins</h3>
<p>Schedule an annual review with your NMHL loan officer. They can alert you to refinancing opportunities, rate changes, or new assistance programs.</p>
<p>By taking these proactive steps, you’ll reduce the likelihood of needing another forbearance in the future.</p>
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Frequently Asked Questions
Most lenders, including NMHL, allow forbearance periods of 3 to 12 months. Extensions may be possible if you can document ongoing hardship, but each extension requires a new agreement and may increase accrued interest.
If the forbearance is approved and you adhere to the agreement, most lenders report the status as "paid as agreed," which does not negatively impact your credit. However, missing payments outside the agreement can harm your score.
Yes. Once you’re current on payments, you can refinance. NMHL’s Re‑Start program offers reduced fees and competitive rates for borrowers who have completed a forbearance and demonstrated repayment stability.
Escrow accounts are typically frozen, meaning property tax and insurance payments are not collected. You’ll need to arrange separate payments to avoid tax liens or lapses in coverage.
For most conventional loans, interest continues to accrue and is added to the loan balance. Interest‑only forbearance options exist but require you to pay the accrued interest each month.
Yes. NMHL’s Forbearance Ready program accepts self‑employed borrowers with documented income drops of 30% or more, using tax returns and profit‑and‑loss statements as proof.
NMHL loan officers will run a personalized analysis comparing repayment plans, loan modifications, and deferral scenarios. They consider your income, remaining loan term, and interest rates to recommend the most affordable path.
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