What is a mortgage recast?

Mortgage recast: the definition

A mortgage recast is a one-time re-amortization of your existing home loan after you pay down a chunk of the principal. You hand your servicer a lump sum, they apply it to the balance, and they recalculate the monthly payment so the smaller balance is spread across the same remaining term at your same interest rate. The result is a lower required monthly payment, no new loan, and no change to your payoff date. The only cost is a one-time recast fee, usually $150–$500.

People search for this idea a few different ways — “what is a mortgage recast,” “what is recasting a mortgage,” “what is mortgage recasting,” and “what is a recast mortgage.” They all describe the same thing: re-amortizing a loan around a reduced balance instead of replacing the loan.

A worked example

Numbers make it concrete. Say you owe a $350,000 balance at 6.5% with 25 years (300 months) left. Your principal-and-interest payment is roughly $2,363 a month.

Now you come into $30,000 — an inheritance, a bonus, proceeds from selling another property — and you apply it as a recast. Your balance falls to $320,000, and your lender re-amortizes that amount over the same 25 years at the same 6.5%. The new payment is about $2,161 a month — roughly $200 less every month, for as long as you hold the loan. You keep your 6.5% rate, you keep your original payoff date, and you pay a single recast fee (commonly around $250) instead of thousands in closing costs.

Want to run your own numbers? The calculator below shows your new payment, total interest saved, and how fast the fee pays for itself.

How recasting differs from refinancing

Recasting and refinancing both lower your payment, but they work in opposite ways. Refinancing replaces your loan with a brand-new one — new interest rate, new term, a credit check, and 2–6% of the balance in closing costs. Recasting keeps your existing loan exactly as it is, changing only the balance and the payment. If you hold a low fixed rate you don’t want to give up, a recast lets you cut your payment without surrendering that rate. If today’s market rates are well below yours, a refinance may save more despite the costs — our mortgage recast vs. refinance comparison runs both side by side.

How recasting differs from extra payments

Making extra principal payments and recasting both involve paying down the balance, but they target different goals. Extra payments keep your monthly payment the same and shorten the loan, saving interest by reaching payoff sooner. A recast lowers your required monthly payment while keeping the original payoff date. A recast also requires a formal re-amortization and a fee, whereas extra payments are just money applied to principal. Choose extra payments if your priority is being debt-free faster; choose a recast if your priority is freeing up cash flow each month.

Which loans can be recast

Most conventional loans backed by Fannie Mae or Freddie Mac can be recast, and many jumbo loans can too. Government-backed loans — FHA, VA, and USDA — generally cannot be recast (more in our FHA, VA & USDA recast guide). Lenders set their own minimum lump sum, commonly $5,000 to $10,000, and policies vary, so confirm the exact terms with your servicer — see mortgage lender recast policies for minimums and fees by servicer. The process takes about 30–45 days and involves no credit check, so it won’t affect your credit score.

Is recasting right for you?

Recasting tends to make sense when three things line up: you hold a low fixed rate worth keeping, you’ve received a lump sum, and you’d rather lower your monthly payment than pay the loan off faster. To go deeper, see whether mortgage recasting is worth it, learn the step-by-step process for recasting a mortgage, or read the full overview of how a recast mortgage works.