Recasting a Conventional Loan: Rules, Minimums, and Process

Yes, conventional loans can generally be recast, and they are essentially the only loan category where the answer is yes. Both Fannie Mae and Freddie Mac have formal servicing procedures for re-amortizing a loan after a large principal payment, and nearly every major servicer offers recasting on conventional loans while excluding FHA, VA, and USDA. That said, "generally yes" is not "automatically yes." Servicer discretion, investor rules, and how your loan is pooled all affect whether your specific loan qualifies. This guide covers the official machinery, the typical minimums and fees, the ARM and jumbo edge cases, and how the process runs.

The official machinery: Fannie Mae and Freddie Mac

Recasting on conventional loans is not an informal favor; it is written into the servicing rulebooks. Fannie Mae's Servicing Guide section C-1.2-01, Processing Additional Principal Payments, requires the servicer to "immediately accept and apply an additional principal payment (referred to as a principal curtailment) identified by the borrower as such for a current mortgage loan." When a borrower then requests re-amortization, the guide directs the servicer through a defined process: complete Form 181, the Agreement for Modification, Re-Amortization, or Extension of a Mortgage, provide a copy to the borrower, and report the change to Fannie Mae. Notably, the guide requires that the re-amortization not be classified as a loan modification, so a recast does not affect your future modification eligibility.

Freddie Mac has parallel machinery. Its Single-Family Seller/Servicer Guide covers curtailment handling in section 8103.3, Application of payments, which is the rule that governs how a principal curtailment is applied before any re-amortization happens. We previously cited a Freddie Mac investor-reporting fact sheet for the formal definition of a principal and interest recast. That document is no longer available at its published URL, so we have dropped the quotation rather than leave a citation nobody can check.

The machinery exists, but it is permissive rather than mandatory: your servicer decides whether to offer recasting at all, and Bankrate confirms that not all lenders do. Mr. Cooper says outright that making the principal payment does not guarantee approval, and Chase says it retains the right to stop offering recasts at any time. In practice, every large servicer we track offers it on conventional loans; see which lenders allow recasting for the current lineup.

Why one Fannie loan qualifies and another does not

Here is a nuance that explains many confusing denials. After your loan closes, the investor either holds it directly, in its own portfolio or a participation pool, or uses it to back a mortgage-backed security sold to outside investors. Fannie Mae's servicing rules condition the reapplication of prepayments on the loan being a portfolio or participation-pool loan, not one backing a mortgage security. Loans inside a security carry payment obligations to bondholders, which constrains what the servicer can restructure. You cannot see this status from your statement, and it can differ between two neighbors with otherwise identical Fannie Mae loans. The only way to know is to ask your servicer whether your loan is eligible, which is one more reason a five-minute phone call should precede any lump-sum payment.

Typical minimums and fees

No regulator sets a minimum lump sum or a fee; both are servicer policy. Documented minimums are commonly $5,000-$10,000. Bankrate puts the typical floor at "often $5,000 or $10,000," and PNC writes that "most lenders want a one-time payment of between $5,000 and $10,000 on the principal in order to process a mortgage recast." Fees typically run $150-$500, most often a flat $250, and several major banks charge nothing at all.

Some servicers publish only part of their policy. U.S. Bank and LoanDepot, for example, publish a $250 fee but no official minimum, and PNC publishes a $10,000+ minimum but no fee. Where a figure is not published, we say so and recommend calling the servicer. Our mortgage recast fees page tracks the full lender-by-lender picture.

Jumbo and portfolio loans

Jumbo loans exceed conforming limits, so they are not Fannie or Freddie loans, but that often works in your favor. When a lender holds a jumbo or other portfolio loan outright, there is no outside investor to answer to, and recasting is frequently available at the holder's discretion. Wells Fargo, notably, markets a recast feature around its jumbo purchase loans. The flip side: policies are entirely lender-specific, some servicers exclude most jumbos (Newrez does), and nothing obligates a portfolio lender to offer re-amortization. Ask directly.

Adjustable-rate mortgages

ARM recasting is servicer-specific. Truist's correspondent bulletin states that its recast program covers conventional loans including ARMs. Newrez recasts select ARMs provided the loan is not in an interest-only period, while excluding interest-only loans generally. Other servicers limit recasting to fixed-rate loans. One terminology warning: on an ARM, the word "recast" also has a separate regulatory meaning, the scheduled payment recalculation when an introductory or interest-only period ends, which typically raises the payment. The voluntary lump-sum recast discussed here is a different event. If you call your servicer about an ARM, be explicit that you are asking about re-amortization after a principal curtailment.

Standard eligibility screens

• First liens only. Second liens are generally ineligible.
• Loan must be current. Under Fannie Mae's rules, extra principal on a delinquent loan must first cure the delinquency before any curtailment applies. Bankrate notes lenders typically want a proven record of on-time payments, often two to six months, before a recast request.
• No active bankruptcy. A standard servicer requirement.
• Investor approval governs. Even at a willing servicer, the loan's investor status can rule a specific loan out, as described above.

The process, step by step

1. Call your servicer first. Confirm your loan is eligible, the minimum, the fee, and whether you must submit a request form before paying. Mr. Cooper, for example, requires the request form before the lump sum arrives.
2. Estimate the new payment. Our free mortgage recast calculator shows the new principal and interest for any lump-sum amount, so you can decide whether the drop justifies the fee.
3. Make the curtailment, marked principal-only. A payment not designated as principal-only can be applied to future installments instead of your balance.
4. Sign the re-amortization agreement. On Fannie Mae loans this is Form 181; other investors use equivalent paperwork. Review the new payment figure before signing.
5. Confirm the effective date. Processing runs from a few weeks to about 90 days depending on the servicer. Keep paying the old amount until the servicer confirms the new one.

Is it the right move?

A recast lowers your payment without touching your rate or payoff date, for a fee of at most a few hundred dollars and no underwriting. Whether it beats the alternatives depends on your goal: recast vs refinance covers when a new rate is worth closing costs, recast vs extra payments covers the faster-payoff route, and is recasting worth it pulls the decision together. If you hold a government-backed loan instead, see our guides for FHA loans and VA loans, where recasting is generally not available and the alternatives differ.

Facts verified August 2026 from the Fannie Mae and Freddie Mac servicing guides and the servicer sources below. Policies change and individual loans vary; confirm eligibility with your servicer before sending funds.