Can you defer a mortgage payment?

A mortgage payment is generally one of the largest monthly expenses for a homeowner. When unexpected financial challenges arise, this crucial bill can cause a great deal of stress—especially if the financial hardship threatens your ability to afford future payments.  

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However, this does not have to mean losing the home you love. Whether you need a short-term buffer or long-term relief, it’s important to understand your options. This post will explore mortgage deferment and other solutions. 

Can you defer a mortgage payment?

If your mortgage payment is due and you're not prepared to handle the cost, the first step is to reach out to your lender as quickly as possible. Because no one wants to go through the headache of a foreclosure, they will most likely support you with a temporary extension or repayment plan. Being proactive and addressing the issue before the bill is 30 days late can increase your chances of finding a simple solution. 

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If you've already missed one or more payments, you should still talk with your lender to keep them from starting foreclosure proceedings. However, you'll likely need a more long-term solution to address your needs. 

Mortgage forbearance vs. mortgage deferment 

Two terms often come up when discussing mortgage relief options: forbearance and deferment. Though sometimes used interchangeably, they have distinct purposes.

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Forbearance: A temporary pause or reduction in mortgage payments—one which you can even explore before you miss any mortgage payments. During the forbearance period, the borrower can skip or make reduced payments for a set period, typically ranging from a few months to a year.

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Deferment: Mortgage deferment, on the other hand, is an extension of forbearance. It involves moving the missed mortgage payments to the end of the loan term, to be repaid as a single balloon payment.

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Unlike forbearance, deferment is not a temporary pause—but more like a reallocation of the missed payments. 

Qualifying for forbearance

Exact requirements vary from lender to lender, but you’ll generally need:

• Proof of your financial hardship (such as job loss or medical emergencies).
• To be in good standing and have a history of on-time payments. 

Qualifying for mortgage deferment

To be considered for a mortgage deferment, you’ll need: 

• A mortgage backed by Fannie Mae or Freddie Mac.
• A conventional, first-lien mortgage loan (fixed or adjustable). 
• To have held your mortgage for at least one year. 
• To be delinquent by two months but no more than six.
• To have more than 36 months left on your loan term. 
• Sufficient funds to prove you can repay the loan moving forward. 

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You can connect with your loan servicer to start the application process if you meet all the criteria. 

Mortgage forbearance and deferment alternatives

The options available will depend on how delinquent your mortgage payment is. However, it's best to take control of the situation by being as proactive as possible—and that starts with reaching out to your mortgage servicer.

Loan modification

How it works: If you need long-term relief, you may want to work with your lender to modify your loan. A loan modification allows you to change the terms of your mortgage to make the monthly mortgage payments more affordable. This typically includes extending the loan term, reducing the interest rate, or changing the loan type. 

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Requirements: To qualify, your lender may require proof of financial hardship. 

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Consideration: If you need a loan modification, reach out to your mortgage servicer as soon as possible. Delaying the conversation—and potentially missing mortgage payments—may make them unwilling to work with you. 

Home equity investment

How it works: If you have sufficient equity in your home, you can leverage it to get current on your mortgage—or even pay a large chunk of it off. One effective way to do so is with a home equity investment (HEI), which allows you to access a single lump sum payout in exchange for a share of your home's future appreciation. HEIs require no monthly payments. Instead, you repay the investment any time during a flexible 30-year term with a refinance, home sale, or using another source of funds. 

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Requirements: HEIs are a great solution for low-income or low-credit-score borrowers. You'll need sufficient equity and a credit score above 500 to qualify, and there are no income requirements. Unfortunately, you can’t get an HEI if you’re over 30 days delinquent on your mortgage. 

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Considerations: When you decide to exit the partnership, you'll be responsible for a balloon payment, so make sure to have a buyout plan. 

Refinance

How it works: Refinancing replaces your existing mortgage with a new, larger loan. You can pocket the difference in cash and use the funds to pay off the mortgage. Since you're changing the loan, you'll have a new rate and terms.

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Requirements: To qualify, you’ll need a credit score of 680 or higher, 15% to 20% equity in your home, a debt-to-income (DTI)  ratio of 43% or less, and sufficient income. It’s possible to refinance with a delinquent mortgage, you’ll just need to discuss it with the lender. 

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Considerations: A cash-out refinance is only worthwhile if you can secure better rates and terms. Refinancing into a higher rate could cost you thousands in interest over the life of the loan.  

HELOC

How it works: A home equity line of credit (HELOC) is one of the most popular equity financing tools on the market. It offers a revolving line of credit, similar to a credit card. 

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During the draw period, you can use funds up to a set limit as needed. Once the repayment period begins, you'll be on the hook for monthly payments with variable interest rates.

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Requirements: Lenders require 15% to 20% equity, a credit score above 680, a DTI of 43% or less, and sufficient income. 

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Considerations: Like any secured loan, defaulting could result in losing the collateral you leverage. Should you default on a HELOC, you risk losing your home. 

Home equity loan

How it works: A home equity loan allows you to borrow against the equity in your home for a single lump sum payout. You repay the loan over a 5 to 30-year term with fixed monthly payments. 

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Requirements: To qualify, you’ll need 15% to 20% equity, a credit score above 600, a DTI of 43% or below, and sufficient income. 

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Considerations: Home equity loans can tie up your monthly cash flow, worsening your situation if you’re unprepared for the cost. 

Final thoughts

Mortgage deferment can be a lifeline when facing temporary financial hardship. However, if you don't qualify, you still have options. Always remember, your lender is there to help. Consult with them to choose the best path forward for your financial situation. 

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A Home Equity Investment from Point can give you a financial buffer without the burden of monthly payments. You can prequalify with no impact on your credit score here.

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