Guide
What Is Mortgage Recasting? A Plain-English Guide
Here’s a word your loan officer probably never mentioned: recast. It’s quietly one of the best deals in personal finance, and almost nobody’s heard of it. If you’ve got a chunk of cash and what you really want is a smaller monthly payment — not a faster payoff, not a whole new loan — a recast is usually the cheapest, least painful way to get one. Below is what it is, how it works, what it runs you, and when it’s the right call. Your own figures go in the Mortgage Recast Calculator.
The plain-English definition
When you recast, you make a large one-time payment toward your principal, and your lender re-amortizes the loan — recalculating your monthly payment based on the new, lower balance, but over the same remaining term and at the same interest rate.
The result: a smaller required monthly payment, the same payoff date, and the same rate you already had.
How recasting actually works
- You send a lump sum to principal (subject to your lender’s minimum, often $5,000–$10,000).
- You request a recast and pay a flat fee (typically $150–$500).
- The lender recalculates your monthly principal-and-interest payment using the reduced balance and your remaining number of months.
- Going forward, your required payment is lower. Your rate and term don’t change.
That’s it. No appraisal, no income verification, no new loan, no closing costs.
A quick example
Suppose you owe $340,000 at 5.75% with 26 years left. Your principal-and-interest payment is about $2,140. You recast with a $50,000 lump sum. The lender re-amortizes the new $290,000 balance over the same 26 years at 5.75%, and your payment falls by roughly $300/month — permanently, with no change to your rate. Try your own figures in the Mortgage Recast Calculator.
Recast vs. refinance: what’s the difference?
Both can lower your payment, but they’re very different:
| Recast | Refinance | |
|---|---|---|
| Interest rate | Stays the same | New rate (could be higher or lower) |
| Closing costs | None (just a small fee) | Typically 2–5% of the loan |
| Credit check / appraisal | No | Yes |
| Term | Unchanged | New term you choose |
| Best when | You want a lower payment and like your rate | You can get a meaningfully lower rate |
If you already have a good rate and just want lower payments, a recast usually beats a refinance. If rates have dropped a lot since you got your loan, a refinance may save more. See our full recast vs. refinance guide.
Recast vs. extra payment
This is the trade-off people miss: a recast and a plain extra principal payment use the same lump sum but produce opposite results. A recast lowers your payment but keeps the term. An extra payment keeps your payment but shortens the term and saves more total interest. Read recast vs. extra payment for the full comparison.
When recasting makes sense
- You have a lump sum and want lower monthly payments, not a faster payoff.
- You like your current rate and don’t want to reset it by refinancing.
- You want to avoid closing costs, appraisals, and paperwork.
- You recently bought a new home before selling the old one, and now want to apply the sale proceeds to lower the new payment (a common “buy before you sell” use case).
When recasting doesn’t make sense
- You want to be debt-free sooner. Prepay instead — it saves more interest.
- Rates have dropped significantly. A refinance might save more overall.
- Your loan type doesn’t allow it. Most conventional loans permit recasting, but FHA, VA, and USDA loans generally do not. Jumbo loans vary by lender.
Which lenders allow recasting?
Most major servicers allow recasts on conventional loans, though minimums and fees differ. We cover the general policies of large servicers in Mortgage Recast by Lender. Always confirm directly with your own servicer, since policies change.
In one sentence
A mortgage recast re-amortizes your loan after a lump-sum principal payment, lowering your monthly payment while keeping your rate and term. It’s cheap, simple, and ideal when cash flow — not faster payoff — is your goal. Run your numbers in the Mortgage Recast Calculator, and compare it against prepaying and refinancing in the Decision Engine.
All figures are estimates. Confirm the specifics with your servicer — and remember this is general information, not advice for your situation.
Run the numbers in our calculator →
Frequently asked questions
How much does a mortgage recast cost?
Most lenders charge a flat recast (re-amortization) fee, typically between $150 and $500. There are no closing costs, no appraisal, and no new credit check — that's a key advantage over refinancing.
Does recasting change my interest rate?
No. A recast keeps your existing rate and your existing payoff date. Only the monthly payment changes, because the lower balance is spread across the same remaining term.
What's the minimum lump sum to recast?
It varies by lender, but a common minimum is $5,000–$10,000 of additional principal. Check your servicer's specific policy before sending funds.