By Meraj Uddin Provat · Last reviewed August 24, 2026 · Editorial Standards
If you come into extra cash — a bonus, an inheritance, an investment payout — there are two ways to put it toward your mortgage: pay it down and keep everything the same, or recast the loan. A recast is the option most homeowners have never heard of, and it can be dramatically cheaper than refinancing.
What a recast actually does
A mortgage recast keeps your same interest rate and same remaining term, but re-amortizes the loan against your new, lower balance after a lump-sum payment. The result: a lower required monthly payment, for a flat fee — typically $150 to $500 — instead of the thousands a refinance costs in closing costs.
A real example: $320,000 balance, $60,000 lump sum
| Before recast | After recast | |
|---|---|---|
| Balance | $320,000 | $260,000 |
| Rate | 6.5% | 6.5% (unchanged) |
| Remaining term | 324 months | 324 months (unchanged) |
| Monthly payment | $2,097.78 | $1,704.44 |
The payment drops by $393.33/month — for a one-time fee of around $300. No credit check, no appraisal, no new closing costs, and your rate does not change (which matters if your current rate is lower than today’s market rate).
Recast vs refinance: when each wins
- Recast wins when your current rate is at or below market rate — you keep the good rate and just lower the payment.
- Refinance wins when market rates have dropped meaningfully below your current rate — a refi captures the lower rate, which a recast cannot do.
- Recast wins on cost: a few hundred dollars vs. thousands in refinance closing costs.
- Refinance wins if you want to change the loan term (e.g., go from 30 to 15 years) or switch loan type — recasting cannot do either.
- Not all loans qualify for recasting — check with your servicer, and note that most government-backed loans (FHA, VA, USDA) generally do not allow recasts.
Run your own numbers
Your balance, lump sum, and remaining term change the outcome. The free Mortgage Recast Calculator shows your exact new payment and total interest saved — no signup required. If you are also weighing whether refinancing makes more sense, the Refinance Break-Even Calculator shows how long it takes a refi to pay for itself.
FAQ
What is the difference between recasting and refinancing a mortgage?
Recasting keeps your existing rate and term and simply re-amortizes the loan against a lower balance after a lump-sum payment, for a small fee. Refinancing replaces the loan entirely with a new rate, term, and full closing costs.
How much does a mortgage recast cost?
Recast fees are typically $150 to $500, set by your loan servicer, compared to refinance closing costs that typically run 2-5% of the loan amount.
Can all mortgages be recast?
No. Most conventional loans allow recasting, but government-backed loans like FHA, VA, and USDA loans generally do not. Check directly with your loan servicer to confirm eligibility and their minimum lump-sum requirement.