You may be able to stop, or at least postpone, soaring mortgage payments and the threat of foreclosure if you have an unaffordable subprime loan and lenders live up to the spirit of the agreement they struck with the government on Thursday.

What could you get?

The original interest rate on your loan could be frozen for five years after it's scheduled to begin ratcheting upward, or you could be quickly switched into a fixed-rate loan that's within your budget.

While this is an important development that could save hundreds of thousands of homeowners, it's not intended to save everyone in danger of losing their homes.

Borrowers whose adjustable-rate loans have already reset, or are behind on their payments, won't meet the strict eligibility requirements.

Of the 1.1 million homeowners who appear to qualify for help, Barclays Capital estimates only about 240,000 will actually get relief.

To be eligible, you must:

• Have a 2/28 or 3/27 adjustable-rate loan.
• Still be paying the initial interest rate.
• Be up-to-date on your payments.
• Be unable to afford the payments when they adjust to a higher rate.
• Live in the house.
• Have taken out your mortgage between Jan. 1, 2005 and July 31, 2007.
• Be expecting your interest rate to adjust or reset for the first time between Jan. 1, 2008 and July 31, 2010.

In one sense, this is nothing new.

Lenders can always modify loans in this way -- they just haven't done it for many borrowers with these kinds of subprime loans.

That's because so many have been repeatedly sold since they were made, ultimately winding up in the hands of huge private investors such as hedge funds -- a type of loosely-regulated mutual fund.

The mortgage-servicing companies hired to collect monthly payments and deal with delinquent borrowers have been reluctant to modify loans they don't own without the investors' approval.

Seeking that on a case-by-case basis has been a long and difficult process -- especially as the number of delinquent loans has exploded.

But government and mortgage industry officials behind the rate freeze say investors have now consented to the widespread modification of loans that meet these criteria without their loan-by-loan approval.

Whether this will provide widespread relief for families facing resets is far from clear.

The plan was negotiated and will be administered by the HOPE NOW Alliance a strictly voluntary, non-profit group made up of mortgage servicing companies, lenders, credit counseling firms, investors and trade associations.

It doesn't establish guidelines, much less mandates, for deciding which borrowers can afford a reset and which cannot. That's being left up to the servicing companies.

Two homeowners with identical loans and incomes, could get two different answers from two different service companies.

That being said, here's a more detailed look at the eligibility criteria:

Your mortgage must be a 2/28 or 3/27 ARM. The initial "teaser rate" for these types of mortgages written over the past several years have typically been between 7% and 9%. It was fixed for the first two or three years, and then could adjust for the final 28 or 27 years of the loan.

That may not sound like a very good rate, but these loans were intended for borrowers with less-than-stellar credit who would have paid at least a couple of points more for a fixed-rate loan.

If you have an interest-only ARM or option-ARM, two other types of loans often given to subprime borrowers, you don't qualify for this plan.

You're up-to-date on your loan. That means you've made all of the payments on time -- no later than 30 days after the due date. If you have a history of late payments or are in foreclosure proceedings because you haven't been able to keep up with your payments, you won't qualify.

When your interest rate adjusts, you won't be able to afford the higher payments.

Most 2/28 mortgage rates are tied to an index known as the 6-month LIBOR or London Interbank Offered Rate -- the rate European banks charge each other to borrow money.

Most ARMs given to borrowers with good credit charged LIBOR plus 2.75%.

2/28 loans typically reset to LIBOR plus 6.25%. Since the index is around 4.8% right now, that meant loans that had been charging 5% or 6% interest quickly began climbing toward 11%.

ARMs given to borrowers with good credit usually reset no more than once a year, and could increase no more than 2 percentage points a year.

2/28 loans reset every six months and could increase 3 percentage points the first time, and 1 percentage point each time after that.

Homeowners who began paying 6% saw their monthly payments increase from $600 a month for every $100,000 they had borrowed (principal and interest only) to $1,100 a month after the first two resets.

No wonder First American Real Estate Solutions, a division of First American Corp., expects one in eight borrowers who took out 2/28 mortgages during the boom years of 2004 and 2005 will default on their payments.

If your mortgage company determines that you won't have sufficient income to make your loan payments upon reset, you'll meet the affordability requirement. If your mortgage company determines that you can afford the payments after the first reset, you won't.

Borrowers who spend more than 50% of their gross income on housing related costs -- mortgage principal, mortgage interest, taxes, assessments and insurance -- are usually considered at high risk for not being able to make their payments.

We'd expect mortgage service companies to establish some sort of criteria based on that. If you're currently paying 43% of your income and the reset would force you to pay 54% of your income, then you would be deemed to qualify for a rate freeze.

But mortgage companies haven't announced their affordability criteria. And if your lender determines you can afford the payments after a reset, you won't qualify. Period.

Your mortgage loan hasn't reset yet. If your mortgage has already reset, you don't qualify -- even if your mortgage changed to a new rate this month.

You must live in the house. The plan only applies to homes that are occupied by the person or persons who took out the mortgage. If you took out a 2/28 or 3/27 mortgage to buy another house, speculate on real estate or to rent out for income, you don't qualify.

If you believe you qualify under these criteria, contact your mortgage lender or the HOPE NOW 24-hour toll free-line at 1-888-995-HOPE, where mortgage counselors, certified by the government, are available to discuss your situation with you.

Even if you don't qualify for this most recently announced mortgage relief plan, don't despair. Contact your mortgage servicing company or HOPE NOW.

The federal government estimates that 50% of all foreclosures occur without the borrower speaking to their lender or a mortgage counselor. Don't lose your home without exploring all the options first -- either call your mortgage company's toll free number, the HOPE NOW 24-hour toll free-line or a non-profit consumer credit counseling agency in your area.

Another good place to seek help is the National Foundation for Credit Counseling, the nation's biggest and oldest credit-counseling organization.

Its 120 agencies abide by a set of professional and ethical standards that have served many individuals and families very well over the past 50 years.

Click here to to find a credit counselor, and then use the "Zip Code Search" to find one in your area. Click on the individual agencies to find everything from costs to office hours.

The fees will be modest and their experienced credit counselors, who negotiate debt reduction and repayment plans every day, will help you figure out your options.

By Amy Buttell Crane

Interest.com Contributing Editor

Have a question about your finances? Ask us at editors@interest.com