You can recast a mortgage when four conditions line up: your loan is a conventional mortgage (not FHA, VA, or USDA), your account is current with a clean recent payment history, your loan has been open long enough to meet your servicer’s waiting period, and you can make a lump-sum principal payment large enough to hit the servicer’s minimum. Meet all four and the lender will recalculate your monthly payment on the reduced balance, keeping your interest rate and payoff date the same.1Fannie Mae. Loan Delivery: Re-amortized (Recast) Mortgages
Your Loan Has to Be Conventional
Recasting is a feature of conventional loans sold to or backed by Fannie Mae or Freddie Mac. Fannie Mae explicitly allows servicers to re-amortize a loan after a borrower makes a substantial principal payment.1Fannie Mae. Loan Delivery: Re-amortized (Recast) Mortgages Freddie Mac’s Seller/Servicer Guide similarly recognizes mortgages with principal curtailments that produce recalculated monthly payments.2Freddie Mac. Guide Section 6302.32 Jumbo loans that a lender keeps in its own portfolio are often recastable too, though the terms vary by institution.
Government-backed mortgages are not eligible. Loans insured by the Federal Housing Administration, guaranteed by the Department of Veterans Affairs, or backed by the USDA’s Rural Housing Service all prohibit voluntary recasting. Those programs have their own insurance structures and pooling rules that don’t accommodate mid-life payment recalculations at a borrower’s request. If you hold one of those loans and want a lower payment, refinancing is your only path.
Adjustable-Rate Mortgages
A standard adjustable-rate mortgage can generally be recast the same way a fixed-rate conventional loan can, as long as the servicer and investor allow it. Payment-option ARMs are different. They carry a built-in mandatory recast, typically every five years, where the lender recalculates payments based on the current balance and remaining term whether or not you’ve made a lump sum. Some payment-option ARMs also trigger an automatic recast if the balance grows past a set ceiling, often 110% or 125% of the original loan amount, from negative amortization. That kind of mandatory recast is a separate mechanism from the voluntary one, and it can raise your payment significantly rather than lower it.
Your Account Has to Be Current
Servicers review your payment history before agreeing to recast. Your account needs to be in good standing: all payments current, with no recent late payments. A 30-day-or-more late payment in the past year is likely to draw a denial or at least push the request back until your record improves. The bar isn’t as detailed as a new-loan underwrite, but the recent payment stripe matters.
The Loan Has to Be Seasoned
You can’t recast a brand-new mortgage. Most servicers require the loan to have been active for at least two to six months, with the specific waiting period depending on the lender and the investor. Some will process a request after just a couple of on-time payments; others want six months of history first. No single federal rule sets the number, so ask your servicer where their line is before you send funds.
The Lump Sum Has to Meet the Minimum
Recasting requires a principal reduction large enough to meaningfully change your monthly obligation. Most lenders set a minimum somewhere between $5,000 and $10,000, and some require more. A few servicers state the minimum as a percentage of your outstanding balance rather than a flat dollar figure. Because the range is wide, confirm your servicer’s specific threshold before committing money.
The payment has to arrive as a single sum designated for principal reduction. Regular extra payments made month by month don’t count toward a recast, even if they’ve added up to a substantial amount. Homeowners commonly fund a recast from proceeds of selling a previous home, an inheritance, a bonus, or dedicated savings.
You’ll Owe a Small Processing Fee
Lenders charge a flat administrative fee to run the recast. The typical range is $150 to $500, and most major servicers land around $250. The fee is usually due when you submit the request. That’s the full cost of a recast: no closing costs, no title work, no county recording.
No Credit Check, Income Check, or Appraisal
This is the part that makes recasting reachable when refinancing isn’t. A recast doesn’t require a credit pull, income verification, or a home appraisal. You aren’t applying for a new loan; you’re asking your existing servicer to recalculate the math on the loan you already have. Your current credit score, your employment situation, and today’s home value don’t factor into the decision.
That opens the door in situations where a refinance would be difficult. If your credit has slipped since origination, if you’ve changed jobs or moved into self-employment, or if your home’s value has fallen, a refinance may not be available. A recast bypasses those obstacles. As long as the loan type qualifies and your payments are current, you’re eligible.
How to Request a Recast Once You Qualify
Call your loan servicer and confirm your specific loan is eligible. Ask about the minimum payment, the fee, and the waiting period. Not every servicer advertises recasting on its website, so a direct phone call is usually the most reliable way to get accurate answers.
Once eligibility is confirmed, the servicer sends a recast agreement or application form. You’ll list the lump-sum amount and its source. Return the signed agreement along with the principal payment and the processing fee. Wire transfers and certified checks are the standard methods for the lump sum, since personal checks for large amounts tend to slow the process.
After the servicer processes the request, you’ll receive a new payment schedule with the reduced monthly amount. This typically takes 30 to 45 days. The new schedule is an amendment to your existing loan, not a new mortgage, so there’s no title work, no new deed of trust, and no county recording. Your next monthly statement reflects the lower payment.
When a Recast Still Isn’t the Right Move
Meeting the eligibility rules doesn’t automatically make a recast the best use of a lump sum. If you’re carrying higher-interest debt like credit cards or personal loans, paying those down first almost always saves more in total interest. Money put into a recast is locked in home equity and hard to reach again without selling the house or taking out a home equity loan.
A recast also doesn’t shorten your loan. Because the term stays the same, the recast only lowers the payment. If your goal is to pay the mortgage off faster, you’d need to refinance into a shorter term or keep making extra principal payments without recasting. And if current market rates sit well below your existing rate, refinancing will likely save more over the life of the loan even with the higher upfront cost.