Recasting is a way to lower your monthly mortgage payment by making a large lump-sum payment toward your principal, then having your lender recalculate your remaining payments based on the smaller balance. Your interest rate and loan term stay the same. Only the monthly payment amount changes, because the lender spreads a reduced balance over the months you have left.
How Recasting Works
The process starts when you contact your lender and ask to recast your mortgage. You’ll make a lump-sum payment toward your principal, often with a minimum of $5,000 or $10,000 depending on the lender. Once that payment is applied, the lender re-amortizes your loan. That means they take your new, lower balance and divide it across the remaining months on your original loan term, using the same interest rate you already have. The result is a smaller required payment each month going forward.
Say you owe $250,000 on a 30-year mortgage at 6.5% with 25 years left, and your monthly principal-and-interest payment is roughly $1,580. If you put $50,000 toward the principal through a recast, the lender recalculates your payment based on a $200,000 balance over those same 25 remaining years at 6.5%. Your new payment drops to about $1,350. You didn’t change your rate or restart your loan clock. You simply reduced what you owe, and the lender adjusted the math.
Costs and Requirements
Recasting is inexpensive compared to most mortgage transactions. Lenders that charge a fee typically set it between $150 and $500. Some charge nothing at all. There’s no credit check, no appraisal, and no income verification. You just need to be current on your mortgage and have the cash for the lump-sum payment.
The lump sum itself is the real cost. Because lenders usually require a minimum of $5,000 to $10,000, recasting works best when you’ve come into a significant amount of cash, whether from selling a previous home, receiving an inheritance, or saving up over time. The larger the lump sum relative to your remaining balance, the bigger the drop in your monthly payment.
Which Loans Qualify
Recasting is available on conventional loans, which covers most mortgages held or backed by private lenders. Government-backed loans, including FHA, VA, and USDA mortgages, are not eligible for recasting. If you have one of those loan types, your options for lowering your payment are generally limited to refinancing or making extra principal payments without a formal recast.
Even with a conventional loan, not every lender or loan servicer offers recasting. It’s worth calling your servicer directly to ask whether they allow it and what their specific minimum and fee requirements are before you start planning around it.
How Recasting Differs From Refinancing
People often confuse recasting with refinancing because both can lower your monthly payment. They work in fundamentally different ways, though.
Refinancing replaces your existing mortgage with an entirely new loan. You go through underwriting again, which means a credit check (most lenders require a minimum score of 620 for a conventional refinance), income documentation, and often a new appraisal. Closing costs typically run 2% to 5% of the loan amount, so refinancing a $300,000 mortgage could cost $6,000 to $15,000. The upside is that refinancing lets you lock in a different interest rate, change your loan term, or both.
Recasting keeps your original loan intact. Your rate doesn’t change, your term doesn’t change, and you don’t go through any approval process beyond confirming you’re current on payments. The administrative fee of a few hundred dollars is a fraction of refinancing costs. The tradeoff is that if your current rate is higher than what the market offers, recasting won’t help you capture a lower rate. It only reduces the balance your payments are calculated against.
When Recasting Makes Sense
Recasting is most useful when you’re happy with your interest rate but want a lower monthly payment. This comes up often for homeowners who bought a new house before selling their old one. Once the previous home sells, they can put the proceeds toward the new mortgage and recast to bring their payment down to a more comfortable level.
It also works well if you’ve received a windfall and want to reduce your monthly obligations without the hassle and expense of refinancing. Because there’s no credit check or income verification, recasting is accessible even if your financial profile has changed since you first got the loan.
Where recasting doesn’t help is when your primary goal is to pay off the mortgage faster. A recast keeps the same end date on your loan. If you’d rather shorten your term, you could simply make extra principal payments without formally recasting, or look into refinancing to a shorter-term loan. And if your current rate is well above today’s market rates, refinancing is likely the better move, since recasting won’t touch your rate.
How to Request a Recast
Start by calling your loan servicer, the company you send your monthly payment to. Ask whether they offer recasting, what the minimum lump-sum payment is, and what fee they charge. If they confirm it’s available, you’ll typically fill out a short request form and submit your lump-sum payment. The servicer applies the payment to your principal, recalculates your amortization schedule, and sends you a new payment amount. The whole process usually takes a few weeks, and your next monthly statement will reflect the lower payment.
Keep in mind that the lump-sum payment is permanent. Once that money goes toward your mortgage principal, you can’t get it back unless you refinance or sell the home. Make sure you’re comfortable parting with that cash before you commit, particularly if it would leave your emergency savings too thin.