A mortgage recast lets homeowners lower their monthly payment by putting a large lump-sum toward the principal balance. Unlike refinancing, a recast doesn't change your interest rate or your loan term. It's usually easier and costs less too. This can be useful when you come across extra money, like from a bonus or inheritance. It's a way to improve monthly cash flow without switching your loan.
What Is a Mortgage Recast?
A mortgage recast is something homeowners can request to lower their monthly mortgage payment. It's different from refinancing because your interest rate and loan length stay the same. Instead, the lender simply recalculates your payment based on a lower principal after you make a large extra payment.
You put a lump-sum toward your mortgage balance, the lender updates the numbers, and your new payment reflects the lower amount you owe. That lower payment can help your monthly budget. Recasts are usually offered on conventional loans. They're not always available on government-backed loans like FHA or VA, so you'll need to check with your lender first.
How a Mortgage Recast Works
The process is straightforward. You send in a large extra payment directly toward the principal. This isn't your regular monthly payment but an additional amount that brings your balance down. After that money is applied, the lender recalculates your monthly payment. Since the principal is lower, the payment goes down. Your interest rate and loan term stay the same.
There's no credit check and no appraisal involved. Many homeowners prefer recasting precisely because it's low-hassle. You're not taking out a new loan, you're just asking your servicer to reamortize the existing one based on your new, lower balance.
Recast vs. Refinance: The Key Differences
A recast and a refinance both aim to lower your monthly payment, but they do it in very different ways. A recast keeps your loan exactly as it is: same rate, same term, same lender. You just reduce the principal and get a lower payment. A refinance replaces your loan entirely with a new one, which gives you the chance to change your rate, your term, or both.
Recasting is typically cheaper and faster. The fee is usually $150 to $500. A refinance involves full underwriting, closing costs, and can run into thousands. If you already have a good interest rate and don't need to change your loan structure, a recast is often the simpler path. If rates have dropped significantly since you got your loan, refinancing might make more sense.
Recast or refinance, which is right for you?
We can walk you through both options, run the numbers on your specific situation, and help you pick the one that actually saves you more.
When a Recast Makes Sense
A recast is worth considering when you suddenly have extra cash available: a year-end bonus, a tax refund, proceeds from selling a previous home, or an inheritance. If you like your current interest rate and don't want to go through the refinance process, applying that cash toward your principal can meaningfully lower your payment without any of the hassle.
It's especially valuable if rates have risen since you got your mortgage. A recast lets you reduce your payment while keeping the rate you locked in. People who plan to stay in their home for years often find recasting gives them better monthly cash flow without disrupting their loan.
How to Request a Recast
Start by confirming with your loan servicer that recasts are available on your loan type. If you have a conventional loan, the odds are good. If you have an FHA or VA loan, it's usually not an option. From there, gather the lump-sum amount you want to put toward the principal and follow your servicer's process for submitting the payment. Some lenders ask for a simple request form. Others handle it over the phone. The recast fee is typically $150 to $500, paid at the time of the request.
After the extra payment is applied and the fee is paid, the lender updates your amortization schedule and sends you a new monthly payment amount. The full process often takes just a few days to a couple of weeks.
Eligibility and What to Check First
Recasting is most commonly available on conventional loans. FHA and VA loans generally don't allow it. Most lenders also set a minimum lump-sum requirement, often $5,000 or more, though the exact number varies. Your loan servicer is the right place to start: they can confirm whether it's available and what their specific requirements are before you make any decisions.
One thing worth noting: even if you make extra principal payments without formally requesting a recast, your loan balance will decrease and you'll pay less interest over time. You just won't see a lower required monthly payment until a formal recast is processed. See our guide on biweekly mortgage payments for another way to accelerate payoff without recasting.
Frequently Asked Questions About Mortgage Recasts
What does a recast usually cost?
Most lenders charge a flat fee between $150 and $500.
Can all loans be recast?
No. Not all loan types or lenders allow recasting. Conventional loans are the most commonly eligible. FHA, VA, and USDA loans generally don't support it.
Does a recast change my interest rate?
No. A recast keeps your original rate. It only recalculates your payment based on the lower principal balance.
Will a mortgage recast shorten my loan term?
No. Your term stays the same. Only your required monthly payment amount changes.
Do I need to re-qualify or submit new financial documents?
Usually not. Recasts don't require a credit check, income review, or full underwriting, since you're not taking out a new loan.
Does recasting affect my escrow or taxes?
No. Escrow payments don't change because taxes and insurance are unaffected. Only the principal and interest portion of your payment decreases.
