What Is a Mortgage Recast?

Short answer

A mortgage recast lowers your monthly payment by re-amortizing the loan after you make a large lump-sum principal payment, while your interest rate and payoff date stay the same. On Fannie Mae loans, the servicer handles it with a re-amortization agreement (Form 181) at your request (as of October 2026). It's not a refinance: no new loan, no new appraisal.

Definition

Recalculating your monthly payment on a lower balance over the remaining term, after a substantial principal payment. Same rate, same end date, smaller payment.

Worked example

Illustration only, not a rate quote: $400,000 balance, 25 years (300 months) left, 6% rate. Payment (principal and interest) is about $2,577. You pay $50,000 down and recast: new balance $350,000, same rate and 300 months, new payment about $2,255. That's roughly $322 less per month. Without a recast, the $50,000 still cuts interest and shortens the loan, but the payment stays $2,577.

Recast vs. refinance

• Recast: same loan, same rate, lower payment; usually a servicer fee, no new closing
• Rate-and-term refinance: new loan, new rate and term, closing costs

If today's rates are higher than yours, a recast keeps your rate. If rates are lower, a refinance may save more; rates vary daily, call 305-425-1990 for today's pricing. Use our break-even guide to compare.

How to request one

Call your servicer (the company you pay each month) and ask whether your loan is eligible, the minimum lump sum and the fee. Not every loan type or servicer offers it. Fannie Mae's Servicing Guide says a re-amortization isn't treated as a loan modification. Your new payment is based on your amortization over the remaining term.

In South Florida

Common in South Florida when buyers close on a new home before selling the old one: they take a larger loan, then use sale proceeds to pay it down and recast. Ask the servicer about minimums and fees before you count on it.