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The fear of layoffs has been strong in the past few years—and for federal workers, that fear only continues to grow.
There is a provision in the Republicans’ proposed budget reconciliation package—also known as the Big, Beautiful Bill— that would allow President Trump to lay off federal workers without a stamp of approval from the Congress. This follows the months of layoffs that came at the hand of DOGE. Though there is no official figure available for the total firings or layoffs in the government so far, this provision has sparked a fresh concern about job stability, to say the least.
After all, an unexpected layoff is sure to cause stress and financial uncertainty for everyone— especially those who have a mortgage on the line.
Here’s the good news: There are ways to protect your home (and credit) if you lose your job.
What to do immeditely after if you’ve been laid off and have a mortgage
As soon as you find out you’ve been laid off, it’s a good idea to explore these mortgage relief options:
Mortgage forbearance
Mortgage forbearance is essentially an agreement between you and your lender to forgo or “skip” payments on a mortgage for a set period of time. “Doing this generally extends the time required to pay off the mortgage (amortization), but it’s an excellent way to improve cash flow during a challenging period of time,” says Chad Harmer, founder and financial planner at Harmer Wealth Management in Toronto, Ontario. Many lenders offer this as a perk or option within their mortgage offerings.
Loan modification programs
Loan modification programs adjust amortization or the time it takes you to pay off your mortgage.
“By extending amortization, you can lower your monthly mortgage payment and again, improve cash flow,” explains Harmer.
There are also circumstances in which lenders will allow you to redraw up to your original approved mortgage amount to help pay down outstanding debts.
Federal and state assistance programs
These programs are in place to educate and guide you on your options during periods of financial hardship— think down-payment assistance, homebuyer grants, and foreclosure aid.
“One example is the Federal Employee Education and Assistance Fund which provides emergency loans/aid to these individuals during their times of need. Also, several federal credit unions provide forbearance and mortgage modification programs specific to these employees,” says Harmer.
Surprisingly, you might not need any documentation at all, depending on the program.
“Mortgage forbearance and modification programs are often included in the general underwriting from the lender at the initial time the borrower took out the mortgage,” says Harmer.
Other scenarios may require proof of income, debt, and expenses, similar to the initial mortgage application itself. Federal and state programs typically require proof of income to qualify.
The sooner you reach out to your mortgage lender to explore your options and determine next steps, the better.
“Borrowers often wait until they begin missing payments before initiating the process, and this often compounds issues. You’re not alone in this, and there is help available, but do not wait,” explains Harmer.
How to prepare for a possible layoff before it happens
By being proactive and planning ahead, you can alleviate stress and open the doors to more options in the event you do get hit by a layoff.
Build a emergency fund
“I recommend that everyone has an emergency fund. For some, this includes general savings accounts, and for others, it means dedicated access to lines of credit,” says Harmer.
The general rule of thumb is to save three to six months of expenses, but the ideal number depends on your risk tolerance, job stability, family size, and whether you have other sources of income.
Reduce unnecessary household expenses
Harmer recommends you come up with a a cash-flow analysis—a fancy way of saying a budget calculator. This is where you take a close look at your income, regular expenses, and discretionary expenses. Then, you determine where you can cut back.
“This process is often very eye-opening for individuals and families. It’s an excellent way to build accountability in one’s finances and find ways to improve them,” explains Harmer.
Understand your lender’s hardship options
It’s always a good idea to familiarize yourself with your hardship options, even if some of them are less than ideal. Collaborating with a lender can create goodwill and mutually beneficial solutions when the going gets tough and an unexpected event like a layoff strikes.
What happens if you stop paying your mortgage
If you simply miss a mortgage payment and promptly rectify it within 10 days, the only consequence is typically a late fee.
“The amount is lender-dependent, but can be anywhere between $45 to $200 per payment missed. A scenario like this is generally referred to as a delinquency and has minimal (if any) impact moving forward,” says Harmer.
A default occurs after you’ve missed payments for 90 days or more, and this is where things become much more serious. In the first 30 to 60 days of missed payments, lenders will generally reach out directly to you and ask for the money.
After 90 days, you’ll receive a a mortgage. At the 120- to 180-day period, the foreclosure process often begins.
Credit impact is relatively minimal if you rectify a missed payment within 15 days.
“Once you start to push past the 30-day point of being late, you begin to see credit scores drop significantly—typically 100 to 150 points,” explains Harmer.
The moral of the story? Being honest and communicating with your lender early on is the best defense against losing your home.