How to Recast a Mortgage: Lower Payments, Same Rate
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To recast a mortgage, pay a lump sum toward principal, usually $10,000 or more, and ask your lender to recalculate your monthly payment based on the smaller balance. Your rate and payoff date stay the same. Most lenders charge no fee or a small one, require no appraisal or credit check, and only work with conventional loans.
We represent NYC buyers, and recasting most often comes up after a windfall: a bonus, an inheritance, or the sale of a previous home. It’s the quiet alternative to refinancing when your rate is already good.
The loan keeps its rate and its deadline; only the payment gets smaller.
How to recast a mortgage, in plain terms
Say you took out a $2,000,000 loan at a 30-year fixed rate, with an $8,000 monthly payment. Four years in, a windfall lets you pay the balance down to $600,000, but your payment is still calculated on the original schedule.
A recast fixes that mismatch. You send the lump sum, the lender recalculates the principal and interest over your remaining 26 years, and your payment could drop to roughly $3,000. Nothing else changes: same rate, same 30-year end date, just a payment that matches what you actually owe. Our mortgages and financing hub covers where this sits among every other way to change a loan.
Mortgage recast vs refinance
Recast keeps the marriage; refinance files for a new one.
| Recast | Refinance | |
|---|---|---|
| Rate | Stays the same | Can change, up or down |
| Payoff date | Stays the same | Resets to a new term |
| Credit check | Usually none | Required |
| Appraisal | Usually none | Required |
| Cost | Often free or a small fee | 2% to 5% of the loan in closing costs |
| Best when | Your rate is already good | Your rate is bad, or you want to cash out |
Recast eligibility requirements and who gets turned down
FHA and VA loans don’t get invited to this one. Recasting is generally limited to conventional, fixed-rate amortizing mortgages. FHA, VA, and USDA loans typically aren’t eligible under their own program rules.
Beyond the loan type, lenders at major New York banks often require a minimum lump sum, typically $10,000 to $20,000 or more. The resulting payment change usually has to be meaningful enough to justify the paperwork on their end.
How much does a mortgage recast cost
The closest thing to a free lunch a mortgage servicer offers. Most lenders charge nothing or, at most, a few hundred dollars, since there’s no new underwriting, no appraisal, and no title work.
Compare that to a refinance, which incurs 2% to 5% of the loan amount in closing costs. If your goal is only a lower payment and your rate is fine, a recast gets you there for a fraction of the cost. It typically takes one to two months to take effect once you submit the lump sum and sign the recast agreement.
When does recasting make sense?
A windfall you don’t want to spend on rate shopping is the classic case. Recasting fits best when you’ve come into money, want a lower payment, and have no reason to touch your rate or term.
It also quietly helps your debt-to-income ratio on paper. A lender evaluating you for a new loan counts your actual required payment, so a recast that drops your reported obligation from $8,000 to $3,000 can meaningfully improve what else you can qualify for. Our refinance guide covers the other route, worth comparing if your rate is actually high.
One drawback worth naming: a lower required payment can reduce the discipline of an aggressive payoff plan. If you were counting on that $8,000 payment to force extra principal down, a $3,000 payment removes that pressure, even though you’re free to keep paying the higher amount voluntarily.
Why does recasting show up after an NYC sale?
It’s the same money a bridge loan was standing in for. A buyer who used a bridge loan to close before their old home sold often has a lump sum in hand once that sale closes. Recasting the new mortgage is frequently the cleanest way to put it to work.
One caution: recasting doesn’t touch New York’s mortgage recording tax. That tax was charged on the original loan amount at closing, and a recast doesn’t record a new loan or trigger any refund. If your goal includes reducing that specific tax, our CEMA guide covers the one legal path to do so, which uses a different tool entirely.
What we tell clients sitting on a windfall
Recast for the payment, refinance for the rate. If your rate is already competitive and you just want the monthly number to reflect reality, a recast is nearly free and takes weeks, not months.
If your rate is well above today’s market rate, run the refinance math instead, since a better rate can outweigh the simplicity of a recast. As Georges puts it, “it’s all about the numbers,” and here the numbers usually settle the choice on their own. On average, our commission rebate returns roughly $22,000 at closing, which some clients apply directly toward a future recast once they’re settled. Price both scenarios on the closing cost calculators before deciding.
Common questions
How do I recast my mortgage? Call your lender’s mortgage servicing department, confirm eligibility, make the required lump-sum principal payment, and sign a recast agreement. It typically takes one to two months to take effect.
What’s the difference between recasting and refinancing? Recasting keeps your existing rate and payoff date and just lowers the payment. Refinancing replaces the loan entirely and can change the rate, term, or both, at a real closing cost.
How much do I need to pay down to recast? It varies by lender, often $10,000 to $20,000 or more at major New York banks. Some lenders set no fixed minimum but require a meaningful change in payment.
Does recasting affect my interest rate? No. Your rate and original payoff date stay exactly the same. Only the monthly principal and interest payment is recalculated.
Can I recast an FHA or VA loan? Generally no. Recasting is typically limited to conventional loans; check with your specific servicer, since some portfolio lenders differ.
Nicole Fishman Benoliel co-founded NestApple in 2017. She's a lawyer admitted to the New York bar - her law degree is from La Escuela Libre de Derecho in Costa Rica, with further study at IE Business School in Madrid and an LLM from Fordham in New York. She does not act in a legal capacity at NestApple; every client is referred to an attorney who handles real estate deals full time.
