How to Recast a Mortgage After a Large Principal Payment

Learn what mortgage recasting is, whether it makes sense for you, and how to request one after paying down principal.

1. Check if your loan allows recasting. Not all mortgages can be recast. Conventional loans (Fannie Mae, Freddie Mac) typically allow it; government loans (FHA, VA, USDA) usually do not. Review your promissory note or call your lender and ask directly: "Does this loan allow recasting?" There is no cost to asking.
2. Make a substantial principal payment. Most lenders require a minimum lump-sum payment of $5,000 to $10,000 before they'll recast. The larger your payment, the bigger your monthly savings. For example, a $20,000 principal payment on a 30-year loan at 6% might reduce your monthly payment by $100–$150.
3. Request the recast in writing. Contact your servicer and ask for a mortgage recast. Provide your loan number, the date and amount of your principal payment, and request a new amortization schedule. Some lenders process this through online portals; others require a phone call or form.
4. Understand the recast fee. Most lenders charge $200–$500 to recast, though some waive it. Ask about the fee before you commit. Unlike refinancing, you avoid appraisals, credit checks, and longer closing timelines—recasts typically close in days.
5. Verify your new payment and timeline. Confirm the new monthly payment amount and the loan's new payoff date. Your loan term does not shorten—only the payment amount changes. If you wanted to pay off faster, making the principal payment itself is what accelerates payoff; recasting just lowers the monthly obligation.
6. Decide if recasting is worth the fee. Compare the recast fee against your monthly savings. If you save $120/month and pay $400 to recast, you break even in 3.3 months. If you plan to stay in the home longer than that payback period, a recast usually makes sense. If you may move within a year, skip it.