What is mortgage loan recasting?
Mortgage loan recasting (also called re-amortization) is the process of paying a large lump sum toward your loan's principal and having your lender recalculate your monthly payment on the smaller balance. The recalculation spreads your new balance across the same remaining term at the same interest rate, so your payment drops while your rate and payoff date stay exactly where they were.
The only direct cost is a one-time recast fee, usually $150 to $500. There's no credit check, no appraisal, and none of the 2–6% closing costs that come with a refinance. That makes recasting one of the cheapest ways to lower a mortgage payment — provided your loan type qualifies.
How recasting works by loan type
Whether you can recast depends almost entirely on what kind of loan you hold:
- Conventional loans (Fannie Mae / Freddie Mac): These are the bread-and-butter of recasting and are usually eligible. If you have a conventional loan and a windfall, a recast is often the obvious move.
- Jumbo loans: Many can be recast, but policies vary widely by investor. Some allow it freely, others not at all. See whether yours qualifies in our lender recast policies table.
- FHA, VA, and USDA loans: These government-backed loans generally cannot be recast. If you have one, read recasting FHA, VA, and USDA loans for the alternatives.
The recasting process, step by step
- Confirm eligibility. Ask your servicer whether your loan can be recast and what investor rules apply.
- Meet the minimum. Most lenders require a minimum lump sum of $5,000 to $10,000 (UWM, for example, sets $5,000).
- Pay the lump sum and fee. Send the qualifying amount to principal and pay the one-time recast fee.
- Get your new schedule. The servicer re-amortizes the balance and your lower payment usually starts within 30–45 days.
Recasting vs. refinancing vs. extra payments
A lump sum can be put to work in three different ways, and each achieves a different goal:
| Option | Monthly payment | Payoff date | Interest rate | Cost |
|---|---|---|---|---|
| Loan recast | Lower | Same | Same | $150–$500 fee |
| Refinance | Depends on new rate | New term | New rate | 2–6% of balance |
| Extra principal payments | Same | Earlier | Same | None |
If current rates are well below yours, compare paths in our mortgage recast vs. refinance tool. If your goal is the fastest possible payoff, see recast vs. extra payments. And if you're weighing the guaranteed return of recasting against the market, try recast vs. invest.
Is loan recasting worth it for you?
Recasting tends to win when three things line up: you hold a low fixed rate worth keeping, you've received a lump sum, and you want a lower required monthly payment rather than a faster payoff. If your rate is low and you're comfortable with risk, investing the lump sum could come out ahead over time. Use the calculator above to see your exact numbers, then read is mortgage recasting worth it to pressure-test the decision.