Definition
A lender's agreement to let you pause or reduce loan payments temporarily during a hardship, without treating the missed payments as defaults. Interest usually continues to accrue on all loan types during forbearance, and the missed amounts must be made up afterward through a lump sum, a repayment plan, or by adding them to the end of the loan.
Why it matters
Forbearance keeps a job loss or medical crisis from becoming a foreclosure or a default, but it is a pause, not forgiveness. Borrowers who do not understand the catch-up terms can face a large pile of missed payments and capitalized interest when it ends.
Example
A homeowner with a $1,800 mortgage payment gets a six-month forbearance after a layoff. At the end, $10,800 of missed payments is due; the servicer agrees to move it to the end of the loan as a deferred balance instead of demanding a lump sum, so the regular $1,800 payment resumes and the $10,800 is paid when the home is sold or refinanced.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.