Recast Mortgage 2026: How to Recast Instead of Refinancing and When It Makes Sense

A mortgage recast, also called a re-amortization, is a process where the borrower makes a large lump-sum principal payment and the lender recalculates the monthly payment based on the new lower balance over the remaining term. The interest rate stays the same. The term stays the same. Only the payment changes. This is different from refinancing, which creates a new loan.

How a Recast Works

• ✦The borrower requests a recast through the servicer and makes a principal paydown, typically $10,000 minimum though many servicers require $50,000 or more.
• ✦The servicer recalculates the monthly payment based on the new balance and remaining months on the original amortization schedule.
• ✦No new appraisal, no new title search, no closing costs beyond a modest recast fee (typically $150 to $500 depending on the servicer).
• ✦The loan start date and maturity date do not change. If you had 18 years left, you still have 18 years left.

When a Recast Beats a Refinance

• ✦Current rate below market: if the borrower has a 3.25 percent rate from 2021 and current rates are 6.5 percent, refinancing would raise the rate by 325 basis points. A recast keeps the existing rate and only lowers the payment.
• ✦Low closing cost threshold: refinancing costs 2 to 4 percent of the loan amount in transaction costs. A recast costs $150 to $500 regardless of loan size.
• ✦Short remaining term: if the borrower has 8 years left on a 30-year mortgage, refinancing resets the clock to 30 years. A recast does not change the payoff date.
• ✦Windfall liquidity event: the borrower received an inheritance, business sale proceeds, or investment liquidation and wants to deploy capital productively into their mortgage.

What a Recast Cannot Do

• ✦Change the interest rate: if the goal is to reduce the rate, refinancing is the only path.
• ✦FHA and VA loans are not eligible for recasts. The recast option is available only for conventional loans, and only if the servicer offers it. USDA loans are also generally ineligible.
• ✦Jumbo loans: some servicers allow recasts on jumbo products. Confirm with the servicer directly.
• ✦A recast does not affect the credit score and does not require qualifying.