Mortgage Recast Explained: Keep Your Low Rate, Lower Your Payment
You don’t have to give up a 3-4% rate to bring your payment down.
Every time rates sit well above where they were a few years ago, I get the same question from homeowners who just got a bonus, sold something, or received an inheritance: “Should I refinance to lower my payment?” More often than not, the better answer is a recast — and it’s the option almost nobody explains clearly before you ask about it directly.
A mortgage recast is when you make a large lump-sum payment toward your principal, and your lender re-amortizes (recalculates) your monthly payment over your remaining loan term — using your existing interest rate. Your rate and term don’t change, only your balance and payment shrink. Recasting is available on most conventional loans, typically costs $150-$500, requires a minimum lump sum (commonly $5,000-$10,000, varies by servicer), and takes about 30-60 days to process.
Have a lump sum and a rate you don’t want to lose?
Let’s see exactly what a recast would do to your payment.
Check My Recast EligibilityHow a Recast Actually Works
- You make a large payment toward principal — a bonus, inheritance, home sale proceeds, or investment payout, applied directly to your loan balance.
- Your lender recalculates your payment based on the new, lower balance, spread over your remaining term.
- Your loan term stays exactly the same — if you had 27 years left, you still have 27 years left, just with a lower required payment.
- You save money every month, and on total interest — because you’re paying interest on a smaller balance for the rest of the loan.
A Real Example
| Before Recast | Amount |
|---|---|
| Original Loan Amount | $400,000 |
| Interest Rate | 6.500% |
| Monthly Principal & Interest | $2,529.13 |
| Total Interest Paid (Est.) | $508,485 |
Apply a $100,000 lump-sum payment toward principal, and here’s what changes:
| After Recast | Amount |
|---|---|
| New Loan Balance | $300,000 |
| Interest Rate | 6.500% (unchanged) |
| New Monthly Principal & Interest | $1,896.85 |
| Total Interest Paid (Est.) | $381,294 |
That’s a $632.28 monthly savings and an estimated $127,191 saved in total interest — without a single change to the rate, term, or lender.
Recast vs. Refinance: Which One Actually Wins
| Factor | Recast | Refinance |
|---|---|---|
| Interest rate | Stays the same | Changes to today’s rate |
| Loan term | Stays the same | Can change (reset to 30 years, or shortened) |
| Cost | $150-$500 flat fee | 2-5% of loan amount in closing costs |
| Credit check / underwriting | Not required | Full application, credit, income, appraisal |
| Best when | Your current rate is at or below today’s market rate | Today’s rate is meaningfully below yours, or you need cash out |
The rule of thumb I give clients: if you locked in a rate in the 3-5% range and today’s rates are still meaningfully higher, recasting protects that rate while still lowering your payment. If today’s rates are at least a full percentage point below what you currently have, a refinance is usually worth the closing costs instead. Recast interest has climbed noticeably as more homeowners hold onto historically low rates while still wanting payment relief.
What You’ll Need to Qualify for a Recast
- A conventional loan (not FHA, VA, or USDA)
- A loan that’s current — no missed or late payments
- A lump sum meeting your servicer’s minimum, commonly $5,000-$10,000
- Willingness to pay a modest processing fee, typically $150-$500
- Most lenders limit recasting to once per 12 months
💰 Mortgage Recast Savings Calculator
See your new payment and estimated interest savings after a lump-sum recast.
Let’s see what your lump sum could actually do.
I’ll confirm your loan is recast-eligible and walk you through the exact process.
Talk Through My Recast OptionsFAQ: Mortgage Recasting
Is mortgage recasting worth it?
Often, yes, if you have a low interest rate you want to keep and a lump sum available. It typically costs far less than refinancing and lowers both your monthly payment and total interest paid, without changing your rate or requiring a new credit check.
Can I recast an FHA, VA, or USDA loan?
No. Recasting is generally only available on conventional loans. Government-backed loan programs don’t offer voluntary re-amortization after a lump-sum payment under their servicing rules.
How much money do I need to recast my mortgage?
This varies by servicer, but a lump-sum payment of at least $5,000 to $10,000 is commonly required as a minimum threshold.
Does recasting require a credit check or new underwriting?
No. Recasting doesn’t require a credit check, income verification, or appraisal — it’s a straightforward re-amortization based on your new balance, which is one of its biggest advantages over refinancing.
How long does a mortgage recast take?
Processing typically takes about 30-60 days from when you submit your lump-sum payment and recast request to your servicer.
Can I recast my mortgage more than once?
Most lenders limit recasting to once per 12-month period, though this can vary by servicer.