Yes, you can sell your home while it’s in forbearance, but that doesn’t mean you need to.
That's especially true if you have equity in your home. If you’re underwater on your mortgage — meaning you owe more than the home’s value — a traditional sale may not be possible, but options like a loan modification or short sale can help you avoid foreclosure and financial strain.
Here's what you should know if you're thinking about selling your house while in forbearance.
How selling a home in forbearance works
The process of selling your home while in forbearance will vary depending on how much your home is worth.
If your home is worth more than what you owe
If the value of your house exceeds what you owe, you should be able to sell your home while in forbearance, just as any homeowner would. The main difference is that you must pay the lender any missed or deferred payments from the sale proceeds in addition to the outstanding loan balance.
Homeowners have generally built up substantial equity in recent years. The average U.S. borrower with a mortgage had approximately $310,000 in home equity in the second quarter of 2026, according to Cotality's latest Homeowner Equity Insights Report.
If your home is worth less than what you owe
Being in forbearance doesn’t necessarily mean you owe more on your home than it’s worth. In fact, negative equity (also called being “underwater”) is relatively uncommon today: less than 2% of mortgaged homes were underwater in early 2026, according to Cotality.
However, if you do owe more than your home is worth and can’t cover the difference out of pocket, you have two options. They both will negatively impact your credit score, but they’re less damaging than a foreclosure.
Short sale
A short sale is where you sell the home for less than what you owe on the mortgage. You may be eligible for a short sale if you don’t qualify for or cannot pursue a loan modification, but you must get your lender’s approval. You may also be required to pay the difference between the sales price and what you owe after the home sale is complete, aka the “deficiency,” but whether you’re responsible for this depends on what state you live in.
Deed-in-lieu of foreclosure
If you cannot sell your home through a short sale, a deed-in-lieu of foreclosure is a possibility. With a deed-in-lieu of foreclosure, you turn over the ownership of your home to the lender or investor in order to avert foreclosure. You will work with your lender to set a move-out timeline, and in some cases, see if you qualify for relocation assistance or a short-term rental arrangement.
🤓Nerdy Tip
If you want to refinance or buy another home after exiting forbearance, your eligibility may depend on your loan type, payment history and how your forbearance was resolved. Lenders and the applicable loan program may have specific requirements for demonstrating that your mortgage is current and that the forbearance has been resolved. Check with your lender or mortgage servicer to determine which requirements apply to your situation.Steps to take before listing your home
1. Request a written payoff quote.
This tells you the total amount needed to pay off your mortgage. Make sure the quote accounts for any missed or deferred payments, interest and fees related to your forbearance.
Why it matters: Your current mortgage balance may not be the same as the amount needed to satisfy the terms of the mortgage and completely pay off the loan.
2. Confirm how your forbearance balance will be handled at sale.
Ask your servicer what happens to the payments you missed during forbearance when you sell your home. Depending on your loan type, the amount may need to be paid when the home is sold. Ask whether there is a deferred balance, partial claim or other amount that will be due at closing.
Why it matters: You want to know the full amount that must be paid before you put your home on the market.
3. Check if you need servicer approval.
If the sale will pay off everything you owe, you can generally proceed with a normal sale. If you expect the sale price to be less than what you owe, tell your servicer before listing. You may need to pursue a short sale or another option. Your servicer will need to approve the short sale before you can proceed.
Why it matters: You want to know ahead of time if there are requirements that could affect your ability to sell.
4. Find out whether there are any other liens or amounts that must be paid at closing.
Verify if there are any other debts or claims against the property that will need to be paid when you sell. These could include a second mortgage, HELOC, property-tax balance, HOA balance or a lien.
Why it matters: Your first mortgage payoff may not be the only amount that has to come out of the sale proceeds.
5. Calculate your estimated net proceeds.
Once you know what you owe, estimate how much money you would have left after selling the home. Start with your expected sale price and subtract your mortgage payoff, any forbearance-related amounts or other liens, and your estimated selling and closing costs. The amount left over is your estimated net proceeds.
Why it matters: This helps you understand whether the sale is likely to pay off everything you owe and if you will have money left after closing.
Alternatives to selling your home in forbearance
If you have equity in your home, you may have options for exiting forbearance that don’t involve selling your home. Your eligibility will depend on the type of loan you have and your financial situation:
- Mortgage refinance: Replaces your existing mortgage with a new one to lower your interest rate or monthly payments. Lenders will review areas like your credit score, debt-to-income (DTI) ratio and equity to determine whether or not you qualify.
- Loan modification: Restructures your loan, potentially lowering payments and lengthening the loan term.
- Repayment plan: Adds part of the past-due amount to your regular monthly payments for a limited time.
- Deferral or partial claim: Maintains current monthly payment and moves the payments you missed to the end of your loan or puts the amount owed into an additional loan on the property, which you would have to pay back when you sell the home or refinance.
- Reinstatement (lump sum payment): Requires paying back all you owe at once. Accept this option only if you know you can afford it.
Reach out for help
At least 30 days before your forbearance plan is set to end, your lender should contact you. If you don’t hear from your lender by the 30-day mark, make sure you get in touch with it.
Your lender is required to let you know when your forbearance plan is scheduled to end, list and describe all of the programs you qualify for, and refer you to at least one option for housing counseling services. If you decide to sell after reviewing your choices, the lender should give you the mortgage payoff amount, which is how much you owe to satisfy the loan.
The entire process can be confusing, but you don’t have to go through it alone. A HUD-approved housing counselor can help you weigh the pros and cons of selling your home. One of the Department of Housing and Urban Development’s approved agencies can connect you to a housing counselor for free or at little cost. You can also find HUD-approved housing counselors by visiting the Consumer Financial Protection Bureau’s website.
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