Yes. Being behind on payments does not stop you from selling, it just means your missed payments, late fees, and remaining loan balance all get paid out of your sale proceeds at closing. If you owe more than the home is worth, you will need your lender's approval for a short sale instead.
How a normal sale absorbs missed payments
If you have equity, being behind on payments is simply a bigger number subtracted from your proceeds at closing. Say your payoff, including three months of missed payments and fees, comes to $265,000, and your home is worth $300,000, you would still net roughly $35,000 minus closing costs even though you started behind. Your lender's payoff quote will include the past-due amount, late fees, and any legal costs already incurred, on top of your remaining principal and accrued interest.
When being behind turns into a bigger problem
The risk is time, not the mortgage math. If you are far enough behind, your lender may have already started foreclosure proceedings, which puts you on a hard deadline separate from a normal listing timeline. Check whether you have received a notice of default, and if so, treat your sale like a pre-foreclosure sale: fast pricing, immediate listing, and direct communication with your servicer's loss mitigation team.
If you owe more than the home is worth
Being behind on payments and underwater on your loan at the same time means you likely need a short sale, which requires your lender to approve accepting less than they are owed. This adds an approval step most sellers do not expect, and it is worth starting that conversation with your servicer before you even list.
Catching up vs. selling
If you can realistically catch up on payments through a repayment plan or forbearance and want to keep the home, that is worth exploring with your servicer first. But if selling is the plan regardless, do not wait to see if you can catch up before listing, every month of delay is a month closer to a foreclosure filing and a smaller pool of equity to work with.
Do not skip listing while you sort out the arrears
Some sellers wait to list until they have caught up on payments, assuming a delinquency will scare off buyers or complicate the process, but buyers and their lenders generally never see your personal payment history, they see a listed property with clear seller motivation to close. Listing while behind, rather than waiting to catch up first, is usually the faster path to actually resolving the situation.
What to double-check on your payoff quote
When you request your payoff, confirm it includes every missed payment, all accrued late fees, any foreclosure-related legal costs already billed to your account, and interest calculated through your actual anticipated closing date rather than the day you requested the quote. An outdated or incomplete payoff quote is one of the most common reasons a closing gets delayed at the last minute, so ask your title company to request an updated quote close to your closing date rather than relying on one pulled weeks earlier.
The Homexa position
A Homexa® agent will run your numbers, payoff including arrears, estimated sale price, closing costs, before you list, so you know within the first conversation whether you are looking at a standard sale or a short sale.
Bottom line
Falling behind on payments does not disqualify you from selling. It just changes the math and, potentially, the timeline. Get an accurate payoff quote that includes what you are behind, get a realistic value estimate, and move quickly if you are anywhere close to a foreclosure filing.