Mortgage recasting: What you should know before you reamortize

If you’re looking to lower your monthly mortgage payment, but it doesn’t make financial sense to refinance, you may want to ask your servicer about whether you can recast the mortgage.¹ We’ll go over the ins and outs to help you decide whether this is the right option for you when compared with the alternatives.

What is a mortgage recast?

A mortgage recast is when you make a lump-sum payment or series of payments in a short time toward the principal balance of your loan. Your lender will then reamortize your mortgage with the new (lower) balance.

With reamortization, your interest rate and repayment term remain the same, but you can lower your monthly payments because your principal amount goes down.

When should you consider recasting your mortgage?

Your servicer may allow a recast if you’ve made the appropriate dollar amount in payments to reduce the balance of your mortgage loan. For new loans, there’s often a requirement that your loan would be a certain number of months old.

A recast is also an option for those who receive a large amount of money – such as an inheritance or a large bonus from work – and desire to lower their mortgage expenses.

How does recasting a mortgage work?

1. Payments are made toward the principal: Whether made in one lump sum or as a series of payments, you need to make a qualifying amount of payments toward the principal balance of your mortgage.

2. You request a recasting of your loan: You’ll need permission from your servicer. This is whoever you make your monthly payments to. It may or may not be your original lender.

3. The lender reamortizes your loan: Your servicer recalculates your mortgage payment based on the new principal balance after the additional principal payments. Your term stays the same.

4. You pay servicing fees: Your servicer will likely charge a fee for this service to cover their administrative expenses in the recast.

5. Your new monthly payments begin: Depending on the timing of your recast, your monthly payment may not adjust immediately. Until the payment adjusts, you’re responsible for the payment shown on your statement.

How soon can you recast a mortgage?

If it’s allowed, recasting may be available anywhere between 1 – 3 months after you’ve begun making your current principal payment. Rocket Mortgage requires that you make at least 2 months of payments at the current balance prior to recasting. There are other requirements lenders may have that we will get to shortly.

Can you extend mortgage amortization?

Typically, the only way to extend your mortgage amortization is to refinance to a longer term. The only other way to do this is through a loan modification, but servicers only offer this as a loss mitigation option for those who have been struggling with their payments as a last-ditch effort to stay in the home.

It often may make more sense to recast than to refinance. If you plan on refinancing to a longer term, you’ll be paying more interest over time relative to staying in the same term. Refinancing also means paying closing costs again. Finally, there may be a prepayment penalty if you pay off your current loan too early.

Mortgage recast vs. principal payment

A mortgage recast involves making a payment toward the principal balance and having your loan reamortized based on that new balance. However, you can also make additional principal payments without having the monthly payment change at all. The advantage of this is that you pay off the balance early.

Compared with recasting, not only does this get rid of your mortgage payment sooner, but you may be able to avoid fees. On the other hand, recasting allows you to permanently lower your payment. This may create more room in your monthly budget.

How to qualify for mortgage recasting

Beyond what we’ve talked about, there are other requirements you have to meet to complete a recast.

1. You can’t have a government-backed loan

You can’t recast a Federal Housing Administration (FHA), United States Department of Agriculture (USDA), or Department of Veterans Affairs (VA) loan under government rules.^2,3 Policies on jumbo loans vary. Rocket Mortgage allows recasting on conforming loans backed by Fannie Mae or Freddie Mac. We don’t offer USDA loans.

You’ll need to refinance your loan if you’re looking to change the payments on a mortgage that’s ineligible for recasting.

2. You must meet minimum principal reduction standards

Most lenders require the borrower to pay a minimum amount of money toward the principal before qualifying for a recast (usually $10,000), though it can also be a percentage of your principal.

Although $10,000 must go toward the principal, Rocket Mortgage doesn’t require that it come in the form of a lump-sum payment as long as the payments come within a 12-month period.

3. You must satisfy equity requirements

You may need to have a certain amount of equity in your loan already before you’ll qualify for a recast. Again, it can either be a fixed dollar amount or a percentage of your principal balance. This doesn’t apply to Rocket Mortgage loans.

4. You must meet your servicer’s payment history requirements

Your servicer might require that you have a history of on-time payments before you can recast. For example, Rocket Mortgage requires that you have at least two consecutive on-time payments on your current loan before recasting.

Should I recast or refinance my mortgage?

When you refinance morning a mortgage, you’re taking on an entirely new loan. With a recast, you reamortize your existing loan at a new balance. There are pros and cons to each option.

Recasting your mortgage

Recasting your mortgage comes with both advantages and disadvantages.

Pros

• Recasting is less expensive. Instead of paying closing costs as you would with a refinance, you typically just pay a small flat-rate recasting fee. The fee at Rocket Mortgage is $250.
• There are no credit or appraisal requirements. You don’t need to meet credit score requirements to recast your loan. Plus, there’s no need to worry about waiting for an appraisal as you would for a refinance.
• You can keep your current interest rate. A recast can allow you to keep your interest rate, whereas with a refinance, you have to accept the current market rate.
• You can save on interest and lower your payment. A recast can be the perfect solution if you have a large amount of money to put toward your loan but aren’t sure how your income will change in the future. Recasting allows you to save on interest without taking on a higher monthly payment.
• You apply your lump sum directly to the principal. If your lender doesn’t allow you to apply money directly to the principal, ask if they offer recasting.

Cons

• Your lender may not allow it. Some lenders don’t let you apply extra payments to your loan principal – they’ll go toward the next month’s payment instead. Although this will get you ahead on your payments, it won’t save you money on interest.
• You may not qualify for a recast. Again, government loans such as those backed by the FHA and VA generally don’t qualify for recasting.
• You need to make a minimum payment amount. Lenders usually only consider a recast if you make a minimum lump-sum payment that’s a specific fixed amount or a percentage of your principal. Plus, you’ll need to pay a fee.
• You don’t shorten the repayment term of your loan. Your monthly payment will go down, but your term length remains the same.
• You can’t access your home’s equity. Your contributed cash will be tied up in your home equity, meaning you’ll need to refinance, or get a home equity loan or HELOC, if you need to access your home equity in the future.

Refinancing your mortgage

Like recasting, mortgage refinancing comes with benefits and downsides.

Pros

• You can change your loan. You have the option to change the conditions of your loan when you refinance. You can shorten or extend your term length, take a lower interest rate, or even refinance to a new loan type.
• You can qualify with almost any loan type. You can refinance any type of mortgage loan. Refinancing may be your only option to change your monthly payment if you have a government-backed loan.
• You can choose a new lender. If you’re unsatisfied with your current lender, you can refinance your mortgage loan with a new one.

Cons

• You’ll likely pay more for the loan. A new loan usually costs more than a mortgage recast, as it includes origination fees, appraisal fees, and other related closing costs.
• You’ll have to qualify again. Your lender will do a full analysis of your credit, income, assets, and home value.
• You’ll potentially pay more interest. You’re taking out a new loan when you refinance your mortgage. Usually, you’ll pay more in interest at the beginning of your loan repayment term, with more of your payment going toward the principal later on. Plus, if you refinance to a longer term, you could end up paying more in interest throughout the life of your loan.

How to calculate your mortgage recast

Let’s make this real with an example. Let’s say that Marion and Kelly take out a 30-year fixed conventional loan for $350,000 at 6.5% (6.766% APR).⁴ The initial payment is $2,212.24. Here’s one example of how a recast might go.

1. Choose a date to make the extra payment: In this example, let’s say Marion and Kelly want to make a $15,000 payment to recast in December 2027 and lower their mortgage payment in the new year.
2. Calculate the new balance: The easiest way to get an estimate is to look at your existing mortgage balance when you’re ready to make the principal payment and subtract the additional amount. Your servicer will have official numbers. Based on our amortization calculator, the one-time additional payment combined with the amount of time elapsed in the term means the new balance is $$325,664.51, assuming the recast takes effect in February 2028.
3. Estimate what your new monthly payment would be: The interest rate on the payment is still 6.5%. Based on the lower balance, the new payment would be about $2,114.35. You also save $81,369.34 in interest.
4. Determine how many years you have left: Because the recast took place in the 27^th month of your loan, you have a little under 28 years left.

The bottom line: A mortgage recast can help you save each month

Recasting involves making a lump sum payment or series of payments in a short period toward your principal and asking your servicer to reamortize your loan to permanently lower your monthly payment. There is a fee, but it may make more sense than refinancing if you’re okay with your rate and want to avoid closing costs.

If you want to refinance to go from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, lower your existing interest rate or cash out equity, refinancing may make more sense. You can get started online.

¹ Refinancing may increase finance charges over the life of the loan.

² Rocket Mortgage is not acting on behalf of FHA or HUD.

³ An interest rate of 6.5% (6.778% APR) is for the cost of 1.875 point(s) ($6,562.50) paid at closing. On a $350,000 mortgage, you would make monthly payments of $2,212.24. Monthly payment does not include taxes and insurance premiums. The actual payment amount will be greater. One point is equal to 1% of the loan amount. Payment assumes a loan-to-value (LTV) of 80.00%. Rates shown valid on publication date of February 4, 2026. Some state and county maximum loan amount restrictions may apply.

Rocket Mortgage is a trademark of Rocket Mortgage, LLC or its affiliates.