Mortgage Recast: How to Lower Your Payment Without Refinancing

A mortgage recast lowers your monthly payment after you make a large lump-sum payment toward your principal. Your interest rate and loan term stay the same, and there is usually no credit check or appraisal. With many homeowners holding mortgage rates lower than today’s market, a recast is getting fresh attention as an alternative to […]

With many homeowners holding mortgage rates lower than today’s market, a recast is getting fresh attention as an alternative to refinancing. Here is how it works, what it costs, and when it may fit.

How a mortgage recast works

You send a lump sum to your servicer to reduce your principal balance.
You ask the servicer to recast the loan.
The servicer recalculates your monthly principal and interest over the remaining term, using the smaller balance.

Your rate and payoff date do not change. Timing varies by lender; one lender says the new payment typically takes effect 30 to 90 days after the lump sum.

Example

NerdWallet gives this illustration: a $360,000 loan at 6% over 30 years has a payment of about $2,158. After 10 years the balance is about $300,600. A $60,000 recast drops the balance to about $240,600, and the payment falls to about $1,724, roughly $434 less per month. Your numbers will differ.

Recast vs. refinance

	Recast	Refinance
Interest rate	Stays the same	New rate
Loan term	Stays the same	New term
Cash needed	Large lump sum	Closing costs
Credit check / appraisal	Typically not required	Typically required
Typical cost	Often $150 to $500 (varies by lender)	Often 2% to 6% of the loan amount

A recast tends to make more sense when your current rate is lower than market rates. A refinance may fit better if you can get a lower rate or want a shorter term.

Who can recast

Conventional loans: generally eligible if the lender offers recasts.
FHA, VA and USDA loans: generally not eligible.
Jumbo loans: depends on the lender.
Other requirements: the loan is usually current, and some lenders require a payment history or a minimum amount of home equity.

Not every lender offers recasts, and few advertise them. Call your servicer and ask.

Minimums and fees

Minimums vary. Sources cite examples from $5,000 to $10,000 or more. One servicer bulletin lists a $5,000 minimum and a $250 fee, and also allows only one recast per 12 months. Fees commonly run $150 to $250 and can reach $500.

Pros and cons

Pros: lower required payment, no new loan, keeps your current rate, far lower cost than refinancing.

Cons: needs a large amount of cash, does not shorten your loan, your cash becomes home equity that is harder to reach, and the rate does not drop.

If your goal is to pay off the loan sooner, extra principal payments each month may save more total interest. A recast is better suited to a windfall when you want a lower required payment.

When a recast may make sense

You bought before selling and will apply the sale proceeds to the new loan.
You received a bonus, inheritance or other windfall.
You want a lower payment but would not give up a low rate.

Thinking of buying? Read our guide to making an offer in Virginia, then search homes or check the real-time market dashboard.

Frequently asked questions

Does a recast hurt my credit? Typically no. Lenders generally do not run a credit check for a recast, but confirm with your servicer.

Does a recast lower my interest rate? No. Only the payment changes.

Should I send the money before asking? Ask your servicer for written instructions first. Payments sent without instructions may be applied to future payments instead of principal.

Talk with us

Buying or selling in Northern Virginia? Call Glenn and Gift Hughes at 703-707-0334 or send us your buyer inquiry.

We are real estate agents, not lenders, and this is general information, not financial or legal advice. Rules, minimums and fees vary by lender. Talk with your loan servicer and a financial professional before making a lump-sum payment.

Sources

Last verified: November 7, 2026.