What is a mortgage recast?
This is not financial advice.
A mortgage recast, also called re-amortization, recalculates the required principal-and-interest payment on an existing loan after a substantial principal reduction. It is not a new mortgage.
For the standard fixed-rate recast modeled here, the remaining balance is spread across the existing remaining term at the existing note rate. The payment falls because there is less principal left to repay, not because the rate has been reduced.
What changes and what stays in place
| Item | Standard recast effect |
|---|---|
| Unpaid principal | Reduced by the lump sum applied to principal |
| Required principal-and-interest payment | Recalculated from the smaller balance |
| Note interest rate | Unchanged |
| Contractual maturity date | Unchanged |
| Escrow for taxes and insurance | Not reduced by the recast formula |
A lower principal-and-interest amount does not guarantee that your total monthly bill will fall by the same amount. Taxes, insurance and escrow adjustments follow their own rules.
Ask your servicer before sending the money
Start with the company that collects your mortgage payments. Ask whether your specific loan is eligible, how much principal reduction is required, what documents are needed and when the new payment would begin. Request any charges and restrictions in writing.
Confirm how to mark the transfer as an additional principal payment. Keep making your currently required payments until your servicer confirms the revised amount and its effective date. A principal payment on its own is not confirmation that a recast has been approved.
Fannie Mae's servicing guidance describes the documentation used for eligible re-amortizations. It is not a promise that every mortgage qualifies.
Decide which question you are trying to answer
If your question is “What could my required payment become?”, use the recast calculator. If it is “How soon could I repay the loan?”, compare the extra-payment calculation. If you want a different interest rate or a new term, read recast versus refinance.
Money used to reduce mortgage principal is no longer available as ordinary cash savings. The calculator does not weigh emergency reserves, other debts, tax effects or your wider financial situation.
Method and transparency
Last updated: 6 November 2026. Local technical preview only. This is not financial advice.