March 10, 2023

Lost My Job, Can't Pay Mortgage [What Are My Options?]

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Losing a job is tough. You have many options before a home sale. But, if you're considering downsizing to a smaller home, we can offer cash for your current house. Get started by filling out the form below.

Lost My Job, Can't Pay Mortgage

Lost My Job, Can't Pay Mortgage

Job security is becoming more and more valued in recent months. Many employees are being laid off and working hours are being decreased. This directly impacts how people pay their loans, including their monthly mortgage.

If you lose your job and can't pay your mortgage, you have a lot of options. These include mortgage modification, refinancing, forbearance, a new repayment plan, renting out the house, getting a deed in lieu of foreclosure, seeking financial assistance, or choosing a short sale. Alternatively, you can sell your house for cash to cover not only your mortgage but also your other loans and bills.

Need guidance in managing mortgage payments when going through unemployment? We're here to help! Check out the rest of this blog for more tips.

What To Do If You Lost Your Job and Can't Pay Your Mortgage Loan

What To Do If You Lost Your Job and Can't Pay Your Mortgage Loan

If you are laid off from work, staying calm may be challenging, but you'll need a clear mind to think of your next move.

Your initial actions when facing financial hardship, according to the Consumer Financial Protection Bureau, should be connecting to your lender or loan servicer and calling a housing counselor.

Call the Mortgage Lender

Typically, the contact number of your mortgage lender is found on the monthly mortgage loan statement. If it isn't, check the lender's website.

Call the Mortgage Lender

Give the lender a call and explain why you are or will be behind payments, whether your job loss is temporary or permanent, and the details of your income, assets, and expenses. You may also send them a hardship letter instead of calling.

Moreover, it is crucial that you mention if you are in the military and are given a permanent change of station so you can qualify for loss mitigation.

Generally, many lenders have numerous programs that can help you create a new payment plan and avoid foreclosureif you can't pay your mortgage due to job loss.

They'll look into your situation and suggest what will work best for you. This is also the same for private lenders such as JPMorgan Chase, Bank of America, and CitiMortgage, among others.

Connect With a HUD-Approved Housing Counselor

Mortgage Modification

Right after you talk to your lender, it might also make sense to get in touch with a housing counselor that is approved by the Department of Housing and Urban Development (HUD)

Think of the counselor as a personal finance guru in terms of home owning. They'll check where you can get additional help or if you can qualify for more assistance programs to alleviate your financial hardship. They'll also help you understand the options offered by your bank so you can pay your mortgage. 

Throughout the process of working with your servicer, the housing counselor will work with your best interests in mind. They'll assist you in filling out paperwork, budgeting your money, getting rid of your loans, etc.

Options When You Lost Your Job and Can't Settle Monthly Mortgage Payments

Options When You Lost Your Job and Can't Settle Monthly Mortgage Payments

Although your job and money situation may seem hopeless, there are actually a lot of actions you can take in order to get through it. These actions generally involve communicating well with your bank, getting financial assistance, or selling your home.

Sell the House for Cash

Selling your house for cash is the way to go if your job loss is permanent and you don't have any leads on where to apply next. A cash sale would cover your mortgage payments as well as your other loans and utility bills while you're still getting back on your feet.

Getting a cash offer is also suggested if your mortgage is quite expensive and its accrued amount over time can lead you to file bankruptcy.

It might make more sense to let go of your home and find more affordable housing or pay rent instead of living a life you cannot afford due to job loss.

Connect with a HUD-Approved Housing Counselor

When you get a cash offer, you sign up for a less stressful process. Since lenders are out of the picture, there isn't much paperwork to be accomplished, and the cash buyer can buy the house fast. 

You won't be asked to make repairs, which typically incur a significant amount of money and take time. 

Cash Offer Process

The process of getting a cash offer for your house involves calling the cash buyer or filling out a form on the cash buyer's website. After which, they'll schedule a visit to your property to formulate an accurate cash offer.

If you accept the offer, the formal sale will commence. They'll send you a contract electronically, which you must review and sign. Once done, you'll agree on the closing and moving-out dates.

During closing, you'll accomplish less paperwork than a traditional sale, and you'll get the money in your bank account immediately. You'll be able to pay what you owe your lender and keep some money for the security deposit or the down payment of a much smaller home.

Mortgage Modification

Sell the House for Cash

Mortgage modification is a type of loss mitigation that involves adjusting your monthly payments according to your budget. Typically, lenders extend the number of years you have to pay off the loan, so your monthly mortgages become affordable.

Of course, there's a catch when your mortgage servicer offers a loan modification. You would have to pay more interest than that of the original loan terms. That's why it is crucial that you know exactly how the loan modification will impact the amount you owe. 

You may find the assistance of a homeowner counselor helpful when applying for a loan modification. Or, if you want someone well-versed in legal aspects, ask for the help of an attorney from a reputable law firm.

Note that your mortgage lender is not obligated to provide you with a loan modification. They only grant this mitigation loss if you have a strong credit prior to your job loss.



Refinancing means getting a new mortgage with a lower monthly payment and trading it for your current one. In other words, the new mortgage will be used to pay off the old one. However, refinancing only works if your credit prior to job loss looks good.

When applying for refinancing, your home should at least have 20% equity to be eligible. This is so you can avoid paying for mortgage insurance and you'll be granted a loan with a much lower interest rate than your current loan.

Note that if you already missed some monthly mortgage payments, there's very little chance that you'll be approved for refinancing. Also, the refinancing process typically takes weeks or months to be approved and you have to pay origination fees for the new mortgage.



Mortgage forbearance occurs when lenders offer to pause monthly payments and late fees or lessen them for a few months to delay foreclosure. This is common for federally backed mortgages such as Freddie Mac, Fannie Mae, etc.

Although it seems that a mortgage forbearance plan alleviates borrowers from paying mortgages, it may actually be the opposite. 

After the forbearance period ends, you have to pay the lump sum of what you owe to the bank instead of partial payments. 

When seeking mortgage forbearance, it is essential to check if you are eligible and clarify its terms with your mortgage lender or loan servicer.

Be sure that you understand how long the forbearance period will last, your temporary payment schedule, your repayment plan, and whether the bank will report your appeal for forbearance to the related credit bureaus.

FHA Special Forbearance for Unemployed Homeowners

If you lose your job and your mortgage is insured by the Federal Housing Administration (FHA) or backed by the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac, you can seek special forbearance (SFB).

Usually, an SFB for federally backed mortgages lasts for one whole year, but some forgiving lenders allow the homeowner to stay on the property until they find a new job and save enough money.

Rent Out the House

Rent Out the House

Another option that you may consider is renting out your home. This will work if you can stay at a friend or relative's house for free while you are still looking for a job. 

When renting out your house, make sure to collect payment that is higher than your mortgage payment because you still need funds for repair and other miscellaneous expenses. 

Also, you have to keep in mind that if you turn your home into a rental, you'll pay higher property insurance. You also have to settle any missed mortgage payments before you can start renting it out.

Deed in Lieu of Foreclosure

Deed in Lieu of Foreclosure

If your missed payments and late fees have already ballooned due to job loss, you may want to get a deed in lieu of foreclosure. This means you are transferring the ownership of your home to your lender to attain mortgage relief.

A deed in lieu of foreclosure is less time-consuming and costly compared to going through foreclosure proceedings. In some cases, the mortgage lender may even pay their borrowers with cash if the home value is way higher than what they owe. 

Getting this deed also makes less impact on your credit than a foreclosure.

Short Sale

Short Sale

A short sale takes place when the value of the property is below what the homeowner owes to the lender.

The owner would sell the home with the help of a licensed real estate agent and the proceeds would go directly to the lender, no matter how small it is. The remaining loan balance would be forgiven.

Similar to getting a deed in lieu of foreclosure process, short sales will also impact your credit, but not as much as foreclosure proceedings and bankruptcy.

Get Mortgage Assistance From an HOA Program

Get Mortgage Assistance From an HOA Program

Most states have a Homeowners Assistance Fund Program that provides mortgage relief for those who lost their job. This was created as part of the American Rescue Plan Act signed by President Joe Biden in March 2021. 

Generally, this program helps eligible homeowners with missed payments, property taxes, utilities, and other housing-related costs to avoid foreclosure. In some states, this program also helps with future mortgage payments and the mortgage doesn't have to be federally backed all the time.

Frequently Asked Questions

Will the Government Help Me Pay My Mortgage if I Lose My Job?

Different government agencies won't directly pay for your mortgage if you lose your job, but they will offer you mortgage payment assistance if you participate in the H4H or Hope for Homeowners Program. H4H will help you refinance into a loan that you can afford and is one of the most effective unemployment benefits offered by most states. 

Alternatively, you can get financial help from your state's Homeowner's Assistance Fund program. 

In 2020, the U.S. Government enacted the CARES Act, which allows homeowners to seek forbearance due to job loss caused by the pandemic.

In the future, the government may implement another mortgage relief similar to the CARES Act that seeks to help struggling homeowners. Lenders would not be able to collect payments until the foreclosure moratorium is lifted.

How Long Will My Mortgage Lender Allow Me to Miss Payments?

Generally, your lender won't start the foreclosure proceedings until you miss four monthly mortgage payments.

However, factors such as the state rules, your lender's policies, and the housing market in your area can impact how long you are allowed to miss payments.

Final Thoughts: Lost My Job, Can't Pay Mortgage

Losing your job when you are paying for a mortgage can be terrifying. This is especially true if you have no one to borrow money from or your relatives refuse to help.

Fortunately, you have a lot of options to navigate this difficult time. You can work directly with your lender for mitigation loss or get mortgage payment assistance through the help of a housing counselor.

There's also the option to sell your house for cash, so you can settle your mortgage and pay your other loans.

If you choose to sell your home, we recommend getting cash offers from multiple companies. Here at Sell My House Fast, we make sure to give you a fair offer, close faster and more reliably on your home so you can downsize and start anew.

Fill out our form below or call us at (844) 207-0788 to get back on your feet and live affordably while searching for a new job.

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catherine mack
Author: Andy Kolodgie

Andy Kolodgie is an experienced real estate investor with a network that expands nationwide. As owner of Sell My House Fast, Andy’s goal is to provide home sellers with more options to their real estate problems than a traditional home sale. 

He’s been featured on multiple publications including Amazon, Yahoo Finance, MSN, HomeLight,, Apartment Therapy,, LegalZoom, Zolo, and

Sell My House Fast has been a cash home buying company since 1999. We buy houses nationwide! At Sell My House Fast, we offer cash for houses and connect sellers with local buyers. If you want to sell your house for cash, fill out our short form to get fair all cash offers for your house!

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