What Is the VA’s COVID-19 Forbearance Program?

It’s a temporary measure that lets eligible veterans pause or reduce monthly mortgage payments if they’re facing financial hardship. This program, first launched under the CARES Act in 2020, has now been extended through summer 2025.

When the COVID-19 pandemic struck, the VA stepped up to protect veteran homeowners from foreclosure. By opting in, you’re not erasing your debt, but you get more breathing room to recover from unexpected expenses, job loss, or other financial setbacks. You’ll repay any missed amounts down the line, usually through flexible arrangements that spread out costs over time rather than forcing a lump-sum payment.

How Forbearance Works for Veterans

• Pause or Reduce Payments: Suspend your mortgage payments entirely or make smaller payments for up to 360 days, with the possibility of a 180-day extension.
• No Lump-Sum Repayment: You won’t have to pay back all missed payments at once. Options include repayment plans or loan modifications that spread the cost.
• Credit Protection: Being in forbearance won’t automatically damage your credit score, although any existing late payments could still affect it.

This program is a powerful option for veterans who need a break from full mortgage payments due to pandemic-related hurdles—without facing immediate foreclosure.

Why the Extension Matters

The VA’s decision to continue offering COVID-related forbearance until summer 2025 acknowledges that many veteran homeowners are still struggling with economic fallout. Rising interest rates, inflation, and ongoing personal challenges—like medical bills—can make it difficult to stay current on mortgage payments.

By keeping the Covid program active, the VA provides more time for veterans to explore and secure longer-term solutions. That’s where the new congressional bill could be a real game-changer, especially if you’re looking to refinance, reduce fees, or tap into additional relief funds.

The New Congressional Bill: A Lifeline for Veterans

A bipartisan proposal in Congress aims to broaden the support system for veterans homeowners. It includes various provisions intended to fill gaps in the VA loan framework, so veterans don’t slip through the cracks. If you’re downsizing, upsizing, relocating, or simply managing a tight budget, this bill could open up more resources.

Key Provisions of the Bill

• Expanded Grant Funding: Injects more money into state-run Homeowner Assistance Fund (HAF) programs for veterans who need help covering mortgage payments, property taxes, or insurance.
• Reduced VA Loan Costs: Lowers the VA funding fee and makes refinancing more straightforward, thereby lowering monthly payments.
• Emergency Mortgage Relief Funds: Establishes a special fund to offer grants or no-interest loans for veterans in danger of losing their homes.

These additions, if passed, would reinforce the existing safety nets and give veterans a comprehensive set of tools to stay current on payments or quickly catch up.

How the Bill Complements Forbearance

Forbearance offers a short-term pause or reduction in your monthly mortgage obligation, but it doesn’t solve the long-term issue of repayment. That’s where the bill steps in.

If you use HAF grants to cover missed payments after your forbearance period, you can bring your mortgage current without draining your savings. Similarly, lower VA funding fees make it cheaper to refinance, whether you’re rolling missed payments into a modified loan or purchasing a different home that better fits your needs.

Comparing Forbearance and Proposed Bill Benefits

Together, the extension of forbearance and the proposed measures in Congress could address both your immediate and future housing challenges.

Other VA Mortgage Relief Options

Beyond forbearance and the potential new bill, the VA offers several longstanding programs to keep veterans homeowners afloat. Each option suits different financial scenarios, so consider which one best meets your needs.

1. Repayment Plan: You pay your usual mortgage payment plus an additional amount each month to catch up on what you missed. This option works well if your income has bounced back and you can afford slightly larger payments.
2. Loan Modification: The VA can adjust key loan terms—like the repayment timeline or interest rate—to lower your monthly payment. The COVID-19 Refund Modification is a popular route for those who fell behind due to pandemic-related issues.
3. Veterans Affairs Servicing Purchase (VASP): Introduced in May 2024, VASP lets the VA purchase defaulted loans from mortgage servicers, then restructure them at a 2.5% fixed rate. However, the VA announced in April 2025 that VASP will no longer accept new enrollees after May 1, 2025, due to program concerns.
4. Homeowner Assistance Fund (HAF): This state-run program provides grants or loans to veterans for mortgage payments, property taxes, or paying off liens. Check your state’s HAF program here to see if you qualify.
5. VA Streamline Refinance (IRRRL): The Interest Rate Reduction Refinance Loan helps you lower your monthly payment by reducing your interest rate. Even if your loan is delinquent, you might still qualify, provided you resolve the delinquency.

All mortgage relief assistance programs for Veterans

Eligibility for Forbearance and Relief Programs

To tap into the extended forbearance or other VA mortgage relief, you generally need to meet the following conditions:

• Hold a VA-guaranteed or VA-held mortgage.
• Experience financial hardship (job loss, medical bills, reduced income).
• Use the home as your primary residence (exceptions may apply for active-duty relocations).
• For certain programs (like VASP or the COVID-19 Refund Modification), your loan should have been current or less than 30 days delinquent as of March 1, 2020.

If you’re unsure about your qualifications, reach out to your mortgage servicer or call a VA loan technician at 877-827-3702 for personalized guidance.

Potential Challenges and Risks

1. Credit Impact: While forbearance alone doesn’t automatically lower your credit score, any delinquent payments before or during forbearance can still hurt your report. There have been cases of servicers reporting post-forbearance modifications in ways that ding credit scores. Always monitor your credit reports for accuracy.
2. Repayment Obligations: Any skipped payments will need to be repaid eventually. If your finances don’t recover, a repayment plan or loan modification might be necessary. A short-term solution can become a long-term headache if you don’t plan ahead.
3. VASP Program Uncertainty: VASP stops accepting new participants on May 1, 2025. Veterans counting on VASP for a fixed-rate rescue might need to look for alternatives, like the HAF or a loan modification.
4. Foreclosure Risks: If you come out of forbearance without a solid plan to address missed payments, you could still face foreclosure once protections expire. The VA’s foreclosure moratorium is set to end in December 2024, so take proactive steps to protect your home.

Actionable Steps for Veterans

Whether you’re new to the concept of forbearance or you’ve used it before, here’s a quick checklist to help you navigate your options:

• Call Your Loan Servicer: Share details about your financial situation and request forbearance or a repayment plan.
• Look into HAF: Apply for grants or loans through your state’s Homeowner Assistance Fund. This can bridge gaps when you’re coming out of forbearance.
• Consult a VA Loan Technician: Free counseling is available at 877-827-3702. They can clarify program details and walk you through your choices.
• Follow Congressional Updates: Keep an eye on reputable sites like Military.com or the VA’s official page to see if and when the new bill passes.
• Steer Clear of Scams: If someone you don’t know offers a quick fix for your home troubles, be cautious. Check with the VA or your servicer before signing anything.

Statistical Insights: Veteran Mortgage Challenges

These figures show how many veterans rely on VA initiatives to stay in their homes. While programs like forbearance and VASP aren’t perfect, they’ve provided crucial support for tens of thousands of households.

The Bottom Line

By extending COVID-19 forbearance through summer 2025 and rolling out new legislative proposals, the VA aims to keep veteran homeowners on solid ground. Veterans can leverage multiple tools, from HAF grants to IRRRL refinancing, to manage or reduce monthly payments.

While short-term help like forbearance buys time, the upcoming bill offers a broader safety net, including emergency relief funds and lower VA loan fees. Stay informed about program deadlines, especially as VASP enrollment winds down in May 2025.

With proactive planning and expert guidance, you can navigate these changes, safeguard your home, and build a more stable financial future.

FAQs About VA Forbearance and Mortgage Relief

1. What is VA COVID-19 forbearance?
   It’s a program that lets veterans with VA-backed mortgages pause or reduce their payments for up to 360 days, plus a potential 180-day extension, now extended through summer 2025.
2. Who qualifies for VA forbearance?
   Any veteran with a VA-guaranteed home loan who’s facing financial hardship is likely eligible, provided they occupy the home as a primary residence. Check with your servicer to confirm.
3. Will forbearance hurt my credit?
   Forbearance itself isn’t supposed to harm your score, but late or missed payments before it started may still have an impact. Some servicers’ reporting practices could affect credit, so monitor your reports closely.
4. How do I repay missed payments after forbearance?
   You can enter a repayment plan, request a loan modification, or use HAF grants to bring your loan current. A lump sum is not mandatory unless that’s your preference.
5. What is the Homeowner Assistance Fund (HAF)?
   It’s a state-administered program offering grants or loans to cover mortgage payments, taxes, or insurance for veterans facing financial hardship. Check your state’s program for details.
6. What is Veterans Affairs Servicing Purchase (VASP)?
   VASP lets the VA purchase defaulted loans and refinance them at a 2.5% rate. However, it stops accepting new applicants after May 1, 2025.
7. How does the proposed congressional bill help veterans?
   It expands HAF funding, reduces VA loan fees, and sets up emergency relief funds to prevent foreclosure and make homeownership more affordable.
8. Can I refinance my VA loan during forbearance?
   Yes. The VA Streamline Refinance (IRRRL) could be an option, even if you’re currently delinquent. You’ll just need to resolve any outstanding delinquency first.
9. What if I can’t repay after forbearance ends?
   Without a viable repayment or modification plan, foreclosure might still occur. The VA’s foreclosure moratorium lasts until December 2024, but you’ll need a long-term strategy.
10. How do I avoid foreclosure scams?
    Be wary of unsolicited offers and never sign documents you don’t fully understand. Reach out to the VA or your servicer to report suspicious activity.

Remember, the sooner you seek help, the more options you’ll have. Veteran homeowners across the country are using these programs to manage hardships and secure a stable future—now it’s your turn.