The 2013 version of this article opened by telling struggling homeowners to refinance at record-low rates. That advice is dead. Rates have spent 2026 in the mid-6s, and for most people short on a payment a refinance is unavailable or unhelpful. What has improved is the menu of relief servicers must consider, and the rules that give you time to use it. Here is the order of operations if you cannot make next month’s payment, or already missed one.

Call your servicer before the payment is missed

Your servicer, the company you send payments to, decides which options you get, and it can only help once it knows there is a problem. Call as soon as you can see the shortfall coming; do not wait for the late notices. Ask three things: who owns or guarantees the loan (Fannie Mae, Freddie Mac, FHA, VA, USDA or a private investor), what loss-mitigation options that owner allows, and what documents make an application complete.

Federal servicing rules buy you time. A servicer generally cannot make the first foreclosure filing until you are more than 120 days delinquent. If you submit a complete loss-mitigation application more than 37 days before any scheduled foreclosure sale, the servicer must evaluate you for every available option within 30 days, and it cannot proceed to a sale while that review is pending. Those deadlines are why a complete, early application matters more than anything else.

The options, from lightest to heaviest

The names vary by loan type, but the structures are consistent. Here is how they work on a Fannie Mae loan, with the FHA equivalents where they differ.

  • Forbearance. Your payment is reduced or suspended for a set period while you recover from a temporary hardship. Fannie Mae grants it in increments of no more than three months at a time, up to a cumulative 12 months without special approval. The missed amounts are not forgiven; at the end you must reinstate, move to another option, or pay off. FHA offers the same temporary pause or reduction.
  • Repayment plan. For a hardship that has already passed, the past-due amount is spread across your regular payments over a set period. On a Fannie Mae loan the combined payment cannot exceed 150% of your normal payment, and a plan longer than 12 months needs Fannie Mae’s written approval.
  • Payment deferral or partial claim. If you can resume your regular payment but cannot catch up the arrears, the past-due amount is set aside as a non-interest-bearing balance due when the loan is paid off, sold or refinanced. Fannie Mae calls this a payment deferral; the loan must be 2 to 6 months delinquent when evaluated, and lifetime deferrals are capped at 12 months of principal and interest. On an FHA loan the equivalent is a partial claim: HUD advances the arrears, up to the equivalent of 12 monthly payments, as an interest-free second lien that you sign in HUD’s favor and repay when the loan is paid off or the home is sold or transferred. FHA also offers a payment supplement, a partial claim that additionally lowers the monthly payment for three years.
  • Loan modification. The permanent option for a lasting drop in income. Fannie Mae’s Flex Modification requires you to be at least 60 days delinquent or in imminent default; it adds the arrears to the balance, may reduce the rate, extends the term to 480 months (40 years), targets a principal-and-interest reduction of just over 20%, and in some cases sets aside part of the principal as a non-interest-bearing balance. The result is a fixed-rate loan with a lower payment. FHA’s modification likewise adds the arrears to the balance and extends the term at a fixed rate.

The 2013 article suggested lengthening your term by refinancing from a 15-year to a 30-year loan. In 2026 a modification reaches the same goal without requiring you to qualify for a new loan at a market rate.

Should you refinance at all?

Only if your current rate is above the market. Borrowers who locked near the 2023 peak, when 30-year rates approached 8%, may genuinely cut their payment by refinancing into the mid-6s, and Fannie Mae’s RefiNow and Freddie Mac’s Refi Possible programs are built for lower-income borrowers in exactly that spot: income at or below the area median, a guaranteed rate reduction of at least half a point, debt-to-income allowed up to 65%, and a $500 appraisal credit, provided the loan is already owned by Fannie or Freddie. But a refinance carries closing costs of typically 2% to 5% of the loan amount, and lenders underwrite it on your current income, credit and payment history. The refinancing guide covers hardship and streamline refinance programs in detail.

Get a HUD-approved counselor on your side, free

HUD-approved housing counselors advise on defaults, forbearance and foreclosure, often at little or no cost. To find an agency near you, call HUD at 800-569-4287 (TTY 202-708-1455) or use the housing-counselor lookup at consumerfinance.gov. The Homeowner’s HOPE Hotline at 888-995-HOPE (4673), run by the Homeownership Preservation Foundation, still operates in 2026 and connects you with HUD-certified foreclosure-prevention counselors at no charge. Be wary of anyone who wants a large fee up front to save your home.

If the house cannot be saved

Sometimes the payment will never fit again, and the goal becomes leaving on your terms rather than the lender’s. With average home equity around $302,000 in mid-2026, many owners in trouble still have real equity, and a normal sale, before default damages your credit, lets you keep it. If you owe more than the home is worth, ask the servicer about a short sale or a deed-in-lieu of foreclosure. These still hurt your credit, but less than a foreclosure: under Fannie Mae’s rules a foreclosure means a seven-year wait before a new conventional mortgage (three years with documented extenuating circumstances), while a short sale or deed-in-lieu means four years (two with extenuating circumstances).

Two rules that always apply

First, state law governs the foreclosure process, its timelines and your rights to cure, and it varies widely. If anything above conflicts with a notice you receive, check it with a HUD-approved counselor or a real estate attorney in your state. Second, a mortgage crisis is rarely a mortgage-only crisis. If the shortfall comes from a broader debt problem, our guide to every option before bankruptcy covers the rest of the balance sheet. In every state and for every loan type, the sooner you call, the more options you have.