Do I Have to Make Mortgage Payments if I Lose My Job?

This scenario played out with many individuals during the time of the pandemic. Some individuals were renting and dealing with their landlords while others owned a home and had mortgage payments to make. In both scenarios, people felt stress and needed to figure out a viable solution.

Some renters even broke their lease, vacated their rental apartments or rental homes, and found a collection on their credit report later on. We have seen this before years later when those individuals are looking to buy a home and the collection suddenly appears on their credit. You can read about if a collection can prevent you from getting a mortgage here.

That story highlights an important truth as silence is the enemy when it comes to your mortgage. If you lose your job, the last thing you should do is avoid phone calls or ignore the problem. Mortgage companies are far more willing to work with you when you reach out before payments are missed. They may offer a short term solution, like deferring payments or reducing them temporarily to give you time to get back on your feet.

Some borrowers may also qualify for government backed assistance depending on the type of loan they have. For example, FHA, VA and USDA loans often come with built in protections and hardship programs. Even conventional loan servicers may provide alternatives, particularly during widespread economic downturns when they know many families are facing the above mentioned challenges.

Of course, not everyone can or wants to remain in their home during a long term job loss. In cases where financial recovery looks unlikely in the near future, selling the home might be a better solution than falling into foreclosure. While that decision can be difficult, it may allow you to preserve credit and protect future financial opportunities. Some homeowners even find that the equity they have built up over time cushions the blow, giving them money to regroup and start fresh elsewhere.

The emotional side of this situation is just as real as the financial side. Losing a job while still being tied to a mortgage can feel overwhelming, even paralyzing. It’s worth remembering that many homeowners have walked this path before. Some came through by tightening budgets and reducing expenses, taking on temporary work or relying on a spouse’s income until stability returned. Others leaned on the flexibility of lenders and government programs. The common thread is that they sought out solutions rather than letting the problem spiral.

It’s also wise to think about protection before a crisis ever hits. Some homeowners purchase mortgage protection insurance which can cover payments in the event of job loss or disability. Others make it a priority to keep a small emergency fund set aside for housing costs. While those safeguards are not always possible, they underscore the importance of preparing for the unexpected when life is steady.

At the end of the day, you are responsible for your mortgage even if you lose your job. With open communication, knowledge of your options and a willingness to face the situation head on, you can find ways to protect your home and your financial future.

A mortgage may be a long term commitment, but life also has a course with ups and downs. While paychecks come and go, resilience, planning and communication can help ensure that a temporary setback does not cost you the place you call home.

Some individuals who have gone through these situations have bought themselves a few months with the mortgage servicer. The mortgage company can defer the payments and add them to the back-end. As an example, if a homeowner had a $3000 per month payment and took 4 months to find a new job, they have worked out a plan where the mortgage servicer will add the 4 months to the mortgage balance. Perhaps, an approximate amount of $12,000 will be added to the mortgage. If the homeowner decided to sell the home a year or two later, they would simply pay off the mortgage balance and also the deferred amount. The lender may or may not charge interest on this deferred amount. While it's not meant to be a long term solution, it can provide some temporary relief to the homeowner to get back on their feet.