A deferral lets you resume your regular mortgage payment after forbearance and move the missed amounts to the end of the loan. Here is how the numbers work and what to ask your servicer before you agree.
A mortgage deferral moves the payments you missed during a hardship to the end of your loan, instead of requiring a lump sum or a higher monthly payment. It is one of the main ways servicers help homeowners exit forbearance. Here is how it works, what it changes about your loan, and what to confirm before you accept one.
What a Mortgage Deferral Actually Does to Your Missed Payments
When your servicer grants a deferral, the principal and interest you skipped are added to the end of your loan term as a balance that does not collect interest. Fannie Mae describes it as a non-interest-bearing balance, due at your loan’s maturity date or earlier if you sell or transfer the home, refinance, or pay off the loan. Once the deferral is complete, you go back to your regular monthly payment.
FHA loans handle the same idea through a “partial claim.” FHA places past-due amounts into an interest-free subordinate lien against the property, repaid only when the last mortgage payment is made, the home is sold, the mortgage is assumed, the title transfers, or certain refinances occur. A deferral does not forgive what you owe; it changes when you pay it back.
How a Deferral Differs From Repaying Forbearance in a Lump Sum
The Consumer Financial Protection Bureau describes several ways to resolve missed payments, and the differences matter:
- Reinstatement. You pay every missed payment at once and return to your regular payment. This works only if you have the cash on hand.
- Repayment plan. A portion of the past-due amount is added to each monthly payment for a set period. Fannie Mae allows repayment plans of up to twelve months.
- Deferral or partial claim. Missed payments move to the end of the loan, so your monthly payment does not increase.
For most government-backed loans, servicers cannot require a lump sum, and Fannie Mae and Freddie Mac do not require one when forbearance ends. If the only option you hear about is paying everything back at once, ask about the others. Our timeline for paying back forbearance walks through how these exit paths unfold.
Who Usually Qualifies for a Deferral
Your servicer decides, based on factors such as how many payments you missed and whether you can resume your regular payment. The typical candidate is a homeowner whose hardship has ended: you can afford your normal payment going forward, but you cannot afford higher payments or a single large payment. Rules differ among Fannie Mae, Freddie Mac, FHA, VA and USDA, so options can vary by loan type.
For FHA loans, be ready for extra steps: your servicer will ask for up-to-date financial details, and it may first require a short trial run of payments to confirm you can handle the arrangement before it approves a home retention option. FHA also limits these permanent solutions, generally allowing one within a two-year span, with an exception for hardships tied to a major disaster the president has declared.
How the Numbers Work: A Short Illustration
Say your payment is $2,000 a month and you paused payments for three months. The example below is an illustration, not an offer:
| Stage | What happens |
|---|---|
| Before the deferral | $2,000 regular payment, plus $6,000 past due |
| After the deferral | Payment returns to $2,000; the $6,000 sits at the end of the loan without accruing interest |
| Payoff, sale or refinance | The $6,000 is repaid then |
Adding missed payments at the end means your mortgage can run longer than the original term, or the deferred balance comes due earlier if you refinance or sell. Interest keeps building on your regular loan balance as before; it simply does not build on the deferred amount.
Escrow, Credit and Refinancing Later
Three details deserve a close look:
- Escrow. Your escrow account may come out of forbearance with a shortage, because taxes and insurance were paid on your behalf. If so, your monthly payment can rise even after a deferral. If you pay taxes and insurance yourself, those bills stay your responsibility, as do HOA or condo fees.
- Credit reporting. If you were current before the hardship and your forbearance was properly arranged, your servicer must report the account as current. You can check your credit reports weekly for free at AnnualCreditReport.com and dispute any error you find.
- Refinancing. Fannie Mae guidance says a borrower who resolved missed payments through a loss mitigation solution is eligible for a new mortgage after making at least three timely payments by the note date of the new loan. The deferred balance is settled when you refinance or sell, which reduces the proceeds you receive.
How to Request One, and What to Do If You’re Denied
Contact your servicer before forbearance ends. Fannie Mae says the servicer will reach out about 30 days before the plan ends, but do not wait. A HUD-approved housing counselor can help you prepare and work with your servicer at no cost. Questions worth asking:
- How much will be deferred, and will it accrue interest?
- Will my escrow change, and will a shortage raise my payment?
- How will the deferral be reported to the credit bureaus?
- What happens to the deferred balance if I sell or refinance?
If the servicer denies a deferral, or you cannot afford your regular payment even after one, a loan modification may fit better. A modification permanently changes your loan terms: missed payments are added to the principal, the term may be extended, and the payment can drop to an affordable amount, though paying off the loan takes longer. FHA also offers a payment supplement that uses a partial claim to reduce monthly payments for three years. Our comparison of forbearance and loan modification explains how the two options differ.
Related guides
- What Is Mortgage Forbearance and How Does It Work? How pausing payments works and what you still owe afterward.
- Can I Pause My Mortgage Payments If I Lose My Job? Options for homeowners facing a sudden income loss.
- A Timeline for Falling Behind on Your Mortgage What happens month by month when payments go unpaid, and when to act.
The short version
- A deferral moves missed mortgage payments to the end of your loan as a non-interest-bearing balance, so your regular monthly payment does not increase.
- For most government-backed loans, servicers cannot require a lump-sum repayment when forbearance ends, and Fannie Mae and Freddie Mac do not require one.
- Deferrals generally fit homeowners who can resume their regular payment but cannot afford higher payments or a single large payment.
- An escrow shortage after forbearance can raise your payment even after a deferral, so ask your servicer before agreeing.
- If you cannot afford your regular payment, a loan modification or an FHA payment supplement may reduce it instead.
Readers also ask
Does a mortgage deferral add interest to what I owe?
Under Fannie Mae’s payment deferral, the deferred principal and interest sit as a non-interest-bearing balance, and FHA’s partial claim is an interest-free lien. Interest continues to accrue on your regular loan balance as before.
When do I have to repay the deferred amount?
At your loan’s maturity date, or earlier if you sell or transfer the home, refinance, or pay off the loan. FHA’s partial claim is repaid when the loan is paid off, the home is sold, the title transfers, or certain refinances occur, among other triggers.
Will a deferral hurt my credit?
There is no single reporting rule for every servicer, so ask how the deferral will be reported before you agree. If you were otherwise current and had a forbearance agreement, your servicer must report the account as current.
What if my servicer only offers a lump sum?
For most government-backed loans, servicers cannot require a lump sum, so ask about a deferral, a repayment plan or a modification. A HUD-approved housing counselor can help you work through the options at no cost.
This guide is general information about U.S. mortgages, not financial, tax or legal advice. Loan terms depend on the lender and on your credit, income and property, so confirm the details with your lender, and see consumerfinance.gov for official guidance.
