You might be able to skip all mortgage payments in 2021 if your home loan is backed by the Federal Housing Administration (FHA), as the Department of Housing and Urban Development announced more relief for borrowers struggling as a result of the pandemic.
The FHA has once again extended the existing pandemic foreclosure and eviction moratorium for single family, FHA-insured mortgages through Feb. 28, 2021. The government agency also announced two additional months for COVID-related forbearance requests, also through Feb. 28.
Under the moratorium, FHA loan providers can’t initiate or proceed with a foreclosure or a foreclosure-related eviction. And by extending the forbearance deadline to Feb. 28, FHA has given borrowers until then make an initial request for six months of forbearance, which can then be extended for an additional six months, if needed. This means that if you make an initial forbearance claim in early 2021 and use all 360 days you’re entitled to, you won’t have to make a mortgage payment until 2022.
With forbearance, you’re still on the hook for payments, of course, but your monthly loan payments are paused—although interest still accrues in accordance with the terms of the loan. That said, you won’t be considered delinquent or otherwise harm your credit score. Just remember that you have to actually ask for forbearance from your lender. Also, don’t ever stop making mortgage payments without checking with your lender first.
For more information, check out the FHA’s COVID-19 Resources for Homeowners. If you need support working with your mortgage servicer or understanding your options, Housing and Urban Development (HUD) can connect you with a HUD-approved housing counselor near you on HUD’s Housing Counseling webpage.
Roughly 12% of all mortgages are backed by the FHA. These loans have been traditionally used by low-to-moderate-income borrowers—typically first-time homeowners—who have lower than average credit scores or perhaps can’t afford large down payments. Unfortunately, the number of FHA borrowers who have fallen behind on their mortgage payments reached 15.7% earlier this year, whereas the delinquency rate for conventional loans was just 6.7 percent, per Bankrate.