Recasting a mortgage typically costs $250 to $500 in a one-time administrative fee charged by your servicer, plus a lump sum principal payment that most lenders set at a $5,000 to $10,000 minimum. The lump sum is not a cost in the usual sense because it becomes equity in your home the moment it posts, but you do need the cash on hand in a single transaction. The fee itself is the only money that leaves your pocket for good, and it covers the servicer’s work to recalculate your monthly payment against the new, lower balance. Your interest rate, loan term, and loan agreement all stay exactly as they were.
The Administrative Fee
Most servicers charge a flat $250 to $500 to process a recast.1Rocket Mortgage. Mortgage Recasting: What You Should Know Before You Reamortize The fee pays for internal labor: updating your loan records and generating a new amortization schedule. It does not reduce your balance or build equity. A few lenders waive it for borrowers with high balances or preferred account relationships, but paying it is the norm. If your servicer allows more than one recast on the same loan, the fee applies each time.
The Lump Sum You Have to Bring
The bigger financial commitment is the principal payment you make to trigger the recast. Most lenders require at least $5,000 to $10,000, though some set the threshold as a percentage of your remaining balance instead of a flat number. The money has to arrive as a single lump sum. Small extra payments accumulated over months will not qualify, even if they add up to the same amount.
Once the servicer applies the funds, your balance drops and your monthly payment is recalculated over the number of months left on your original term at your original rate. The larger the lump sum, the deeper the cut to your monthly payment. A borrower putting $50,000 against a $300,000 balance sees a much bigger reduction than one contributing the minimum. Lenders also require the loan to be current, with no late or missed payments, before they will process the request.
How That Compares to Refinancing
The reason the recasting fee looks small is the comparison. Average refinance closing costs ran roughly $2,400 nationally in 2025, and total costs including taxes and prepaid items can reach 2% to 6% of the loan amount. On a $300,000 mortgage that is $6,000 to $18,000. A $250 to $500 recast fee is a fraction of that, which is why recasting appeals to borrowers who like their current rate and just want a lower monthly payment.
Whether Your Loan Qualifies
Recasting is generally available only on conventional loans, conforming or jumbo. Government-backed mortgages are not eligible for a voluntary, borrower-initiated recast. FHA servicing regulations reference recasting only as a loss mitigation tool for borrowers in default, not as an option for borrowers in good standing who want a lower payment.2eCFR. Part 203 Single Family Mortgage Insurance VA program rules do not include a re-amortization option after a lump sum principal payment, and USDA rural housing loans work the same way. If you hold any of those loan types, refinancing is the only path to a lower payment.
On a conventional loan, your servicer still has to follow the guidelines of whichever investor owns the loan. Fannie Mae, for example, requires the servicer to complete a specific modification agreement and deliver updated loan data reflecting the recast.3Fannie Mae. Loan Delivery Job Aids Recast Loan Overview Confirm eligibility with your servicer before you move any money.
Timing and Seasoning
Most lenders will not recast a brand-new mortgage. There is no universal rule, but two to six months of on-time payments is a common minimum before a servicer will consider the request. Some lenders also cap how often you can recast on the same loan. If you expect more than one windfall over time, ask upfront whether repeat recasts are allowed. The administrative fee applies each time.
A PMI Bonus Worth Asking About
If you still pay private mortgage insurance, a large lump sum can get you to the balance where PMI comes off, but it does not happen automatically. Under Fannie Mae’s servicing guidelines, automatic PMI termination is tied to the original amortization schedule, specifically the date the balance was first scheduled to reach 78% of the original property value. A lump sum gets you to that balance sooner in reality, but the scheduled date on the original table does not shift on its own.4Fannie Mae. Termination of Conventional Mortgage Insurance
You can, however, request borrower-initiated PMI cancellation once your actual balance reaches 80% of the original property value. After the recast drops your balance to that point, write to your servicer and ask. The servicer will evaluate the request and may require a current appraisal. Getting rid of PMI at the same time as the recast can compound the monthly savings.4Fannie Mae. Termination of Conventional Mortgage Insurance
Extra Payments Instead of a Recast
If you have the lump sum ready, one alternative is to simply apply it to principal without recasting. Your required monthly payment stays the same, but you pay off the loan earlier, and the total interest saved is actually slightly greater than with a recast because you keep making the original higher payment against a shrinking balance. A recast lowers your required payment going forward. You still save interest from the principal reduction, but if you only pay the new minimum, you finish the loan on the original schedule.
A middle path, if your budget allows, is to recast for the lower required payment and then keep paying the original amount voluntarily. You get a safety net if cash gets tight and the faster payoff if it does not.
How to Request One
Start with your servicer. Not every servicer offers recasting, and requirements vary, so confirm the details before you move money around. Ask about the minimum lump sum, the exact fee, any seasoning requirement, and whether the investor behind your loan permits a recast.
Once you are cleared, the servicer will send a recast request form. You will need your loan account number, current principal balance, and the dollar amount you plan to pay. The servicer uses those figures to calculate your projected new monthly payment before you commit any funds. Get that math in writing and check it.
After you sign and submit the lump sum, usually by certified check or electronic transfer, the servicer processes the payment and recalculates your schedule. Processing can take up to 90 days from the date the servicer receives both the funds and the fee. Keep paying your original monthly amount until you receive written confirmation of the new payment and its effective date. That protects you from any late-payment risk during the transition.