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Mbanc NMLS #38232 | Equal Housing Opportunity Lender

How COVID Forbearance Affects Bank Statement Loan Eligibility

COVID-era mortgage forbearances — which peaked in 2020 and 2021 — created a specific credit event category that differs from traditional credit events like bankruptcy or foreclosure. The seasoning requirement is 12 months, not 36 months.

If your forbearance ended more than 12 months ago:
You may qualify for standard bank statement loan programs. The forbearance itself, fully resolved and more than 12 months in the past, does not reduce your program access under Mbanc’s guidelines.

If your forbearance ended less than 12 months ago:
Under the Prime Ascent program, a forbearance, modification, or deferral within the last 12 months is treated as a 0x90x12 housing history — meaning you had a 90-day payment gap within the last 12 months. This reduces:
– Maximum LTV on primary residence purchase to 70%
– Maximum loan amount to $1,000,000
– Refinances are not available

COVID Forbearance Timeline — Where Are Borrowers Now?

COVID forbearances that ran from March 2020 through mid-2021 have, for most borrowers, been resolved and seasoned past the 12-month threshold. A borrower whose forbearance ended in June 2021 has over 48 months of post-forbearance history as of mid-2026 — well beyond the 12-month requirement.

For borrowers who entered later forbearances or took multiple forbearance extensions, the end date may be more recent. Know your exact forbearance end date before applying.

Post-Forbearance Documentation

When applying for a bank statement loan after a forbearance, you’ll likely need to provide:

– Documentation of the forbearance period (servicer letters, forbearance agreement)
– Evidence that the forbearance was resolved (reinstatement letter, loan modification documentation, or documentation of the repayment plan completion)
– Verification that payments have been current since resolution

The clean payment history since forbearance resolution is the most important factor. 12+ months of on-time payments post-resolution demonstrates recovery and is the core qualifying requirement.

The Difference Between Forbearance and Modification

Forbearance: Temporary pause or reduction of required mortgage payments. The missed payments are deferred — they don’t disappear, they’re added to the end of the loan or resolved through a lump sum or repayment plan.

Modification: Permanent change to the loan terms — rate, term, balance, or payment amount. Modifications are treated identically to forbearances under Mbanc’s guidelines: must be more than 12 months in the past for standard program access.

Deferral: A specific forbearance resolution method where missed payments are moved to the end of the loan as a non-interest-bearing balloon. Also treated the same as forbearance in terms of seasoning.

Frequently Asked Questions

Can I get a bank statement loan if I had a COVID forbearance?

Yes, if the forbearance ended more than 12 months ago and has been fully resolved. Mbanc’s standard bank statement programs are available to borrowers with seasoned forbearances.

How long do I have to wait after a forbearance to get a bank statement loan?

12 months from the resolution date — not 36 months like bankruptcy or foreclosure. This is a significantly shorter waiting period.

Does a COVID forbearance show up as a derogatory mark on my credit?

Under CARES Act guidance, COVID-related forbearances that were properly reported should not show as derogatory. However, credit reporting varied across servicers. Review your credit report before applying to confirm how your forbearance was reported.

I completed a loan modification in 2022. Can I qualify now?

If your modification completed more than 12 months ago, you may qualify for standard bank statement loan programs. For a 2022 modification, you are well past the 12-month threshold as of 2026.

What if my forbearance was on an investment property, not my primary residence?

Investment property forbearances are evaluated under DSCR or bank statement investment property programs. The 12-month seasoning requirement applies regardless of property type.

About the Author

Mayer Dallal is the Managing Director of Mbanc (Mortgage Bank of California, NMLS #38232), a consumer-direct Non-QM lender specializing in bank statement loans, DSCR loans, and asset utilization programs for self-employed borrowers and real estate investors. Mbanc is licensed in 24 states for primary residence lending and 46 states for investment property financing.

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Mbanc NMLS #38232 | Equal Housing Opportunity Lender

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