What Is Mortgage Recasting? | Bankrate

What is a mortgage recast?

If you are a homeowner with a mortgage, a mortgage recast is one way to reduce your monthly payments and save money over time. With this strategy, you make a large lump-sum payment toward your loan’s principal. Your lender then reamortizes the remaining balance, recalculating your monthly payments based on the new, lower balance. This results in smaller monthly payments moving forward.

A mortgage loan recast doesn’t change your interest rate or shorten your loan term. Instead, it lowers your payment because you’re financing a smaller remaining balance. Over time, that also reduces the total interest you pay on the loan.

Not all types of mortgage loans are eligible for recasting, however. Some lenders don’t offer this option, and most government-backed loans, including FHA, VA and USDA mortgages, cannot be recast.

How does recasting a mortgage work?

If you decide to recast your mortgage, here’s how the process typically works:

1. Contact your lender to determine your eligibility. Make sure your lender and loan type allow recasting. If they do, ask about the specific requirements you’ll need to meet.
2. Make a payment. Next, you’ll make a large, lump-sum payment toward your loan principal. Your lender may require a minimum amount, often $5,000 or $10,000.
3. Your lender recalculates your loan balance and payments. After applying the payment to your principal, your lender will recalculate your monthly payments based on your new, lower balance.
4. You pay the recasting fee, if applicable. If your lender charges a recasting fee, it’ll typically cost between $150 and $500.

Mortgage recasting vs. refinancing

Mortgage recasting and refinancing can both lower your monthly payment, but there are important differences between the two:

• Refinancing: When you refinance, you’ll apply for an entirely new mortgage, with a new interest rate and terms, and pay another set of closing costs. Your new loan will pay off your old one. Most borrowers refinance to get a better interest rate, switch from an adjustable-rate to a fixed-rate mortgage or swap equity for cash, in the case of a cash-out refinance.
• Recasting: When you recast your mortgage, your loan stays as-is, but your monthly payment changes. You won’t get a shorter repayment term or a lower interest rate, but you may prefer that if your rate is already below current mortgage rates.

Should you recast or refinance your mortgage?

If you want to keep your current interest rate and just lower your monthly payment, a mortgage recast may be a good choice, if your lender allows it. Keep in mind, however, that you need the financial resources to make a significant lump-sum payment to complete the recast. Recasting can be a good option for borrowers with a low interest rate they’d lose through a refinance.

If you wish to change your interest rate, shorten or lengthen your loan term, or tap into your home’s equity for cash, refinancing is typically the better option.

Both recasting your mortgage and making extra principal payments will reduce your principal balance and save you money on interest. But here’s the difference: When you recast, you keep your original loan term while lowering your monthly mortgage payments.

Making extra principal payments, on the other hand, doesn’t require a large lump-sum payment. You just increase the size of your monthly payment, and the extra money goes toward paying off your balance sooner. These additional payments can be as much or as little as you wish, giving you some month-to-month flexibility depending on your finances.

To understand how making extra principal payments might affect your loan, check out Bankrate’s mortgage payoff calculator.

Should you recast or make extra principal payments?

If you want to pay off your mortgage faster, then making extra principal payments is the way to go. But if you’d rather reduce your monthly mortgage payment to free up more funds each month, you should consider recasting.

How to calculate your mortgage recast

If you’re curious about how much your monthly payment would change after recasting, you can use Bankrate’s amortization schedule calculator.

As an example, let’s say you take out a 30-year mortgage for $350,000 at an interest rate of 6.8%. Your monthly principal and interest payment is $2,281.74.

After 10 years, the balance would be $298,915. At that point, you decide to recast the loan by making a $50,000 lump-sum payment, reducing your balance to $248,915. You’ll also pay a $250 recasting fee. For the final 20 years of your term, your monthly payment will be $1,900 — more than $380 less than your original payment.

How to qualify for mortgage recasting

To be eligible for mortgage recasting, your lender must allow it and you must meet specific requirements. You must generally have:

• A conventional loan: Government-backed mortgages — including FHA, VA and USDA loans — aren’t eligible for recasting.
• A minimum lump-sum payment: You might need a minimum principal payment to recast a loan, often $5,000 or $10,000.
• A minimum amount of equity: Some lenders require a certain amount of home equity to recast a mortgage.
• Good loan standing: You should have a proven record of on-time mortgage payments to recast your loan.

Pros and cons of a mortgage recast

A mortgage recast can be a great way to lower your mortgage payments, but it also has downsides.

Should you recast your mortgage?

Recasting your mortgage is an effective way to reduce your monthly mortgage payments and save on interest. As of the second quarter of 2025, roughly 70% of outstanding U.S. mortgages had interest rates below 5%. If you have one of these, refinancing may not be as appealing as recasting.

However, recasting isn’t right — or available — for everyone. You should only consider recasting if:

• Your lender and loan type allow it.
• You’re satisfied with your current loan terms.
• You have a large lump sum to put toward your mortgage principal — and that money wouldn’t be better used for other purposes.

Even if you have tens of thousands of dollars you could devote to a recast, you’ll want to ensure that a recast is the best use of those funds. For example, if you don’t have an emergency fund or you’re carrying high-interest debt, start by paying down debts and saving for a rainy day. Likewise, if your mortgage has a relatively low interest rate and you could get a better return on your money by investing it, you may consider investing instead of a recast.

Frequently asked questions

• How soon can you recast your mortgage?
  

  There is no industry-wide standard waiting period to reamortize a mortgage, and most lenders set their own requirements before they will allow a recast. Most require at least several months of on-time payments before you can request a recast, often ranging from two to six months. In addition, some lenders may require that you have a certain amount of equity in your loan before you qualify, either a fixed dollar amount or a percentage of your principal balance.

• How long does a mortgage recast take?
  

  In total, the mortgage recasting process takes approximately 45 to 60 days. You’ll keep making your normal mortgage payment during this time. When you receive your updated amortization schedule, you’ll begin making the new, lower payments.