The Quick Read: Usually, yes, once your old loan is current and you have made a short run of on-time payments under whatever catch-up deal you signed. The refinance has to actually help you, though, and it cannot be used to pay off past-due amounts. How you exited forbearance, which kind of loan you hold, and how much equity you have decide the answer. A refinance is a good fix for some “too-high payment” problems and the wrong tool for others.
Why Is the Payment Too High After Forbearance?
Start with the cause, because the cause picks the fix. Forbearance paused or reduced your payments. It did not erase what you owed. The paused amount has to come back some way, and that way is often what pushes the payment up.
Refinance savings and break-even estimate
The starting figures are an example value with a balance in proportion and a placeholder for costs. Replace them with yours, and enter the current rate from your statement.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $245,000 current balance, a current rate you enter and a remaining term seeded at twenty-five years, closing costs seeded at $5,000 as an editable placeholder (not a fee quote) and rolled into the new loan, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The new rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a refinance quote; a refinance is priced by the lender at lock, and the current rate, the remaining term and the closing costs are figures you enter. The current payment is estimated from the balance, the current rate and the remaining term; the break-even divides the closing costs by the monthly saving and ignores the interest effect of a longer term. On the VA IRRRL the funding fee is added to the loan unless the veteran is exempt. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages; Lendmire is a broker, never the lender.
Four causes show up again and again:
- A repayment plan. A slice of the missed amount is added to each regular payment for a set period.
- A deferral or partial claim. The missed amount moves to the end of the loan or into a second lien. The payment may look normal, but a balance is waiting.
- A modification. The loan terms were rewritten, and the new payment still strains your budget.
- A change in income or costs. The loan is fine. Your job, hours, taxes, or insurance are what changed.
The federal consumer-finance regulator tells borrowers plainly that forbearance is not forgiveness and to ask the servicer how paused amounts get repaid. Your exit paperwork should name which path you are on. Find it before you do anything else.
| What's pushing the payment up | What's happening | Refinance a fit? |
|---|---|---|
| Repayment plan | Catch-up added to each payment | Often, after the plan is done or seasoned |
| Deferral or partial claim | Balance sits at the end or in a second lien | Sometimes, and the balance may be paid off in the new loan |
| Modification | New terms, payment still too high | Possible after the trial period; benefit must be real |
| Lost income | Payment is fine, income is not | Only if a longer term or lower rate truly lowers the payment |
Can You Refinance Right Now?
Yes, in one case: your loan is current. Under the FHFA's published post-forbearance policy, a borrower who is current is eligible to refinance. That covers people who kept paying through forbearance and people who reinstated the loan. If you stayed current, there is no extra waiting period.
If you did not stay current, you wait until the catch-up arrangement has been performed for a short stretch. That stretch is called seasoning. Seasoning is the proof period a lender wants between a problem and a new loan. It is counted in on-time payments, not in a calendar year. The "wait a year" rule you may have heard is a myth for most conventional files.
One honest caveat. The most detailed post-forbearance rules come from agency guidance first issued during the pandemic era. Agencies update guidance, so confirm current treatment with the lender before you plan around any number below.
How Long Do You Wait on a Conventional Loan?
Fannie Mae's lender letter LL-2020-03 sets the pattern:
| How you exited | What the lender looks for |
|---|---|
| Stayed current | Nothing extra |
| Repayment plan | Three payments under the plan, or the plan completed, whichever comes first |
| Payment deferral | Three consecutive payments after the deferral takes effect |
| Modification | The three-month trial period completed |
| Reinstatement | Loan brought current; refinance proceeds cannot do it |
"Current" has a precise meaning. You paid every payment due in the month before the new note date by the last business day of that month. Miss that and the file stalls.
The borrower must be performing, with no missed payments under the plan.
Across the wholesale programs Lendmire places files with, a borrower who cannot produce the exit letter, or whose servicer's payoff statement does not match what they thought they owed, can stall a file. Request both early.
Can the Refinance Pay Off What You Missed?
Partly. This is where borrowers get tripped up.
A refinance cannot be used to reinstate a loan. If you are behind, you cannot close a new loan and use the proceeds to bring the old one current. You must reinstate from your own eligible funds, and the lender documents where the money came from.
A deferred balance is different. Fannie Mae's FAQ on deferred balances says a deferred amount on the payoff statement can be included in the payoff of a limited cash-out refinance. It counts as part of what is needed to pay off the existing first mortgage.
The catch: that amount lands in your new loan balance. A rolled-in deferral can shrink the monthly relief you were counting on.
What Changes for FHA and VA Loans?
Government loans have their own clocks, and they differ in ways that matter.
FHA. HUD's Mortgagee Letter 2020-30 sets post-forbearance seasoning. For a no-cash-out refinance, you finish the forbearance plan and make at least three consecutive payments. For a cash-out refinance, it is at least 12. That gap is large, so if you were hoping to pull cash out of an FHA loan, the wait is much longer.
The FHA Streamline is the lighter route for an existing FHA loan. Across the wholesale programs we place, it generally means no appraisal, a limited credit review, and a net tangible benefit test. Net tangible benefit means the new loan must measurably help you. The agency also requires at least six payments on the FHA loan being refinanced, and missed forbearance payments do not count toward that minimum. After a modification, the six payments must be made under the modification. HUD's Streamline page adds that closing costs cannot be rolled into the new Streamline loan amount.
If you want a full-appraisal FHA rate-and-term instead, that program runs to 97.75% LTV. LTV is loan-to-value, the loan balance divided by the home's value. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
VA. The VA IRRRL (Interest Rate Reduction Refinance Loan) is for an existing VA loan. Our program carries a 0.5% funding fee unless you are exempt, no VA appraisal, a net tangible benefit test, and seasoning of the later of 210 days and six payments. VA guidance generally requires the new principal-and-interest payment to be lower than the old one, with exceptions such as moving from an adjustable rate or shortening the term. Because a separate post-forbearance waiting period is not something this article can confirm, ask your lender how they treat forbearance on an IRRRL.
What Do Lenders Check Beyond the Waiting Period?
Passing seasoning gets you in the door. Underwriting decides the rest. The lender reviews:
- Payment history since you exited. Clean and on time.
- Credit. Wholesale conventional programs generally start at a 620 decision score, and the automated finding governs most files.
- Income and debt ratios. The total ratio ceiling is generally 50% on automated files.
- Equity. A rate-and-term refinance on a one-unit principal residence goes to 95% LTV, or 97% where the existing loan is agency-owned and the first-time-buyer program allows.
- Documents. Your exit letter, payoff statement, and income paperwork.
Above 80% LTV, mortgage insurance applies. You can request cancellation at 80% of original value with good payment history, and the servicer must end it automatically at 78%. That is the Homeowners Protection Act at work. All figures are subject to lender guidelines and full file review, and none is a commitment to lend.
Credit reporting during forbearance varied by servicer. A state housing agency FAQ noted a loan current when it entered forbearance was reported as current, while a delinquent loan kept its delinquency status. Pull your credit report and see how yours was reported before you apply.
When Does the Refinance Count as Cash-Out?
Sometimes a forbearance fix quietly changes the category. If a second lien was used to resolve your arrears, Fannie Mae treats paying it off as a cash-out refinance, not a rate-and-term, because that lien was not a purchase-money lien. Cash-out is tighter: conventional leverage tops out at 80% on a one-unit principal residence and 75% on two- to four-unit homes, and the loan you pay off must generally be at least 12 months old.
A related trap: Fannie Mae's prohibited-practices rule bars a limited cash-out refinance if you did a cash-out refinance with a note date 30 days or less before the new application. Do not stack them.
Occupancy matters too. Second homes and rentals get lower maximum leverage than a home you live in. For this article, assume the home is your principal residence.
Will a Refinance Actually Lower Your Payment?
Not automatically. A refinance can change a payment in only three ways: a lower rate, a longer term, or a smaller balance. Each of those carries tradeoffs.
Picture a homeowner whose deferral comes due on refinance. The new loan pays off the first mortgage and the deferred balance together. The balance rises a little, but a fresh 30-year term spreads it out. The payment drops. The total interest over the life of the loan goes up, because the clock restarted.
Now picture a homeowner whose payment is high because of a repayment plan that is nearly done. Refinancing may save little, since the plan ends on its own soon. Waiting could cost less than refinancing would in closing costs.
The honest test is a break-even. Divide your total closing costs by your monthly savings. That is how many months you must keep the loan to come out ahead. Costs are built into the loan one way or another, either paid up front or folded into the balance. A "no-cost" refinance still has costs; they are priced in elsewhere.
Quick comparison of your options:
| Option | Lowers monthly payment? | Main tradeoff |
|---|---|---|
| Refinance | Often | Closing costs, term reset |
| Modification | Yes, if approved | Servicer decides; may extend term |
| Deferral or partial claim | Not by itself | Balance comes due later |
| Repayment-plan change | Maybe | Servicer must agree |
| Selling | Ends the payment | You leave the home |
If your income has dropped for good, a refinance helps only if the new payment fits the new income. Ask the servicer about a modification in parallel.
What If You Are Not Eligible Yet?
Use the waiting window. It is not wasted time.
1. Get the exit letter and confirm which path you are on.
2. Count seasoning from the right date. Repayment plans count from the plan start. Deferrals count from the agreement's effective date. Modifications count from the end of the trial period. FHA counts differently from conventional.
3. Make every payment by the last business day of the month, not just before the grace period ends.
4. Request a payoff statement and look for any deferred balance or subordinate lien.
5. Check your credit report for errors from the forbearance period.
6. Build equity cushion. Under about 80% LTV you avoid mortgage insurance on a conventional loan. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
If you will never qualify for a refinance, say a recent late payment or thin equity, talk to your servicer about a modification. Do that before you fall behind again.
Common Mistakes
- Assuming forbearance wiped out the balance.
- Planning to use refinance proceeds to reinstate.
- Missing the "current as of note date" test by a few days.
- Assuming an FHA Streamline has no rules. The benefit test and payment history still apply.
- Ignoring the cash-out label when a second lien is involved.
- Refinancing a loan that is a few payments from the end of a repayment plan.
Key Terms Defined
Forbearance: a temporary pause or reduction of your mortgage payments. The amount is still owed.
Seasoning: the proof period of on-time payments a lender wants before approving a new loan.
Deferral: a way of moving missed payments to the end of the loan or into a second lien.
Net tangible benefit: a measurable improvement the new loan must give you, required on government streamlines.
LTV: loan-to-value, the loan balance as a percentage of the home's value.
Limited cash-out refinance: a rate-and-term refinance that pays off existing loans and allows only small cash back.
Frequently Asked Questions
Can I refinance while I am still in forbearance?
Generally not. Lenders look for a loan that is current, with the catch-up arrangement performed for the required seasoning. A loan can even count as "in forbearance" if you kept paying, so ask your servicer how yours is coded. Finish the exit first.
Will forbearance hurt my chances on credit alone?
Resolved forbearance payments under the agencies' temporary rules are not treated as historical delinquencies on conventional files. Your credit score, ratios, and payment history since the exit still count. Reporting varied by servicer, so check your report.
Can missed payments be rolled into the new loan?
A deferred balance or remaining repayment-plan amount can generally be paid off through the new loan. Reinstating a delinquent loan with refinance proceeds is not allowed. Rolling the amount in raises your new loan balance.
Is an FHA or VA Streamline easier after forbearance?
They are lighter on appraisal and credit review, but they have their own seasoning and benefit tests. FHA requires six payments on the loan being refinanced, and missed forbearance payments do not count. Program details are subject to lender guidelines and full file review.
Can I take cash out after forbearance?
Yes, in some cases, but the wait and leverage are stricter. FHA cash-out requires 12 post-forbearance payments, and conventional cash-out has lower maximum leverage than rate-and-term. Nothing here is a commitment to lend.
If you are weighing a refinance and want the break-even run on your own numbers, Lendmire can help you compare the programs on the same home through its refinance programs. For borrowers who then want to tap equity, Lendmire's piece Can a High-Cost County Homeowner Take a Big Cash-Out Refinance? covers that lane.
The cleanest refinance after forbearance is the one you time to the end of seasoning, not the end of your patience.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. CFPB
2. FHFA: Refinance and home purchase eligibility for borrowers in forbearance
3. Fannie Mae Lender Letter LL-2020-03
4. Fannie Mae COVID-19 FAQ on deferred balances
5. HUD
6. Fannie Mae Selling Guide B2-1.3-04: Prohibited refinancing practices
This article is part of Lendmire’s Refinance series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Should You Refinance to Lower Your Payment If the Term Resets? · How Much a Cash-Out Refinance Holds Back on a High-Escrow Pool · Should You Refinance to a Shorter Term or Keep the 30-Year?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.