Most homeowners know about refinancing. But very few know about recasting — and it might actually be the smarter move right now, especially if you locked in a low interest rate you never want to give up.
A mortgage recast lets you drop your monthly payment significantly by making a one-time lump sum payment toward your principal. No new loan. No credit check. No closing costs. No change to your interest rate. Just a lower payment — starting the very next month.
Here's everything you need to know about how it works, when it makes sense, and how to calculate your savings before you call your lender.
When you recast your mortgage, you make a large one-time payment directly toward your principal balance. Your lender then re-amortizes the remaining loan — meaning they recalculate your monthly payment based on the new lower balance, using the same interest rate and the same remaining loan term.
The result: a permanently lower monthly payment for the rest of your loan.
"A recast doesn't shorten your loan or change your rate — it lowers your monthly payment. You keep your timeline and your rate, but your payment drops permanently."
Here's how the math works on a typical mortgage:
You make a $50,000 lump sum payment. Your new balance is $250,000. Your lender recasts the loan:
That's $310 back in your pocket every single month — permanently — for a one-time recast fee of $150–$500. The break-even on that fee is typically just 1–2 months of savings.
See your exact new payment — enter your balance and lump sum amount
Try the Free Recast Calculator →Call your loan servicer and ask if your loan is eligible for a recast. Conventional loans typically qualify. FHA, VA, and USDA loans generally do not.
Most lenders require a minimum payment of $5,000–$10,000 or more. Confirm this number before proceeding.
Submit the payment and make sure it's designated as a principal reduction — not a future scheduled payment. This step is critical.
Most lenders charge $150–$500 to process the recast — a fraction of refinancing closing costs.
Your lender recalculates and sends a new payment schedule. Your lower payment typically takes effect within 1–2 billing cycles.
| Feature | Recast | Refinance |
|---|---|---|
| Changes interest rate | ✕ No | ✓ Yes |
| Lowers monthly payment | ✓ Yes | ✓ Yes |
| Credit check required | ✕ No | ✓ Yes |
| Closing costs | ✕ $150–$500 fee only | ✓ 2–5% of loan |
| Changes loan term | ✕ No | ✓ Yes (resets clock) |
| Requires lump sum | ✓ Yes | ✕ No |
| FHA/VA loans eligible | ✕ Usually not | ✓ Yes |
| Income verification | ✕ No | ✓ Yes |
Extra principal payments pay off your loan faster — they shorten the term and save more total interest. But your required monthly payment stays the same.
Recasting lowers your required monthly payment permanently — keeping the same payoff date. You save less total interest but gain immediate monthly cash flow relief.
"Most homeowners have never heard of recasting. It's one of the most underused tools in personal finance — especially right now when so many people have rates they'd never want to refinance away from."
Extra principal payments shorten your loan term while keeping your required payment the same. A recast does the opposite — it keeps your loan term the same but lowers your required monthly payment. Both save interest, but they solve different cash-flow goals.
Most conventional loan servicers offer it, but it's not universal — some smaller lenders or loan servicers don't support recasting at all. Always confirm directly with your servicer before assuming it's available.
Most lenders charge a flat fee between $150 and $500 to process a recast — dramatically less than the 2-5% of loan value that refinancing closing costs typically run.
No. Since there's no credit check or new loan application involved, a recast has no impact on your credit report or score.
Generally yes, if your lender offers recasting — the recast recalculates your payment based on your current rate at the time, whatever that happens to be under your ARM's terms.
This varies by lender, but $5,000-$10,000 is a common minimum threshold. Some lenders set it higher. Always confirm the exact number with your servicer before planning around it.
It can still make sense — you get lower monthly payments immediately, which is valuable regardless of how long you stay. Just know you won't recoup a large lump sum through appreciation or resale the way you might with other financial moves; the recast's value is the monthly cash flow relief itself.
Many lenders allow it, though some cap how often — often once per year. Check your servicer's specific policy if you're considering multiple recasts over time.
Calculate your exact new payment, monthly savings, and break-even point
Use the Free Recast Calculator →