Options to lower your mortgage payment without refinancing
Not every solution requires a new loan. These options focus on reducing expenses tied to your mortgage, like insurance, taxes or how your loan is structured.
Recast your mortgage
A mortgage recast lets you make a one-time lump-sum payment toward your principal. In return, your lender recalculates your monthly payments—based on your new, lower balance—while keeping your original interest rate and term. This can reduce your monthly payments without the closing costs or paperwork of refinancing. Just note that recasts are typically available only for conventional loans in good standing, and some lenders charge a small administrative fee.
PRO TIP
Not all lenders offer mortgage recasts, and government-backed loans (FHA, VA, USDA) usually aren’t eligible. Be sure to check with your lender before making a lump-sum payment.
Eliminate Private Mortgage Insurance (PMI)
If you put down less than 20% when you bought your home, you’re likely paying PMI, a type of insurance that protects the lender if you stop making payments. In most cases, lenders are required to cancel it once you reach 22% equity, as long as your payments are current. For more details, check your lender’s policy or official PMI removal guidelines.
At a glance: when PMI can be removed
| Equity in home | What happens with PMI* |
|---|---|
| 20% | You may be able to request removal (an appraisal is often required) |
| 22% | Lender must remove automatically on most conventional loans (if your payments are current) |
*Not all loans are eligible for PMI removal. Check your lender’s guidelines.
Appeal your property taxes
If your home’s assessed value seems higher than comparable homes in your neighborhood, you may be overpaying on property taxes. Filing an appeal with local tax authorities—using comparable sales data as evidence—could lower your assessment. When escrow is included in your monthly payment, a lower tax bill can reduce your escrow payments, which may bring down your monthly mortgage amount.
PRO TIP
Even a small change in property tax assessments can change your escrow amount. Your lender will adjust your monthly mortgage payment after your next escrow analysis.
Shop around for homeowners’ insurance
Your homeowners’ insurance is typically part of your monthly mortgage payment (through escrow), so finding a lower premium can make a real difference. Compare providers annually or consider raising your deductible or bundling policies to potentially lower monthly mortgage costs without changing your loan.
Options that involve refinancing or loan adjustments
Sometimes the most effective way to lower your mortgage payment is to change the terms of your loan. These options often bring more savings but come with additional considerations.
Refinance to a lower interest rate or longer term
Refinancing replaces your current mortgage with a new one, possibly with a lower interest rate or with a longer repayment term. Either option can lower your monthly payment.
Switching mortgage types can sometimes help you save. For example, refinancing from a fixed-rate loan to an adjustable-rate mortgage (ARM) may initially lower your mortgage payment. But there are risks to consider. Refinancing comes with closing costs, extending your term can increase the total interest you pay and, in the case of an ARM, your payment can rise in the future if interest rates go up.
PRO TIP
Try our Mortgage Refinance Calculator to estimate how much you could save—or lower your mortgage payments—before deciding if refinancing is right for you..
Consider a mortgage loan modification
A mortgage loan modification changes the terms of your existing loan. Lenders may reduce your interest rate, extend the term or switch the loan type to help you afford your payments. This is typically an option for borrowers facing hardship who may not qualify for refinance. While it can make payments affordable, it requires documentation and may lengthen repayment or affect your credit. Carefully consider what kind of modification is offered because if you still can’t make the payments, you could risk losing your home.
Explore forbearance
Forbearance is a temporary pause or reduction in payments. It’s helpful during financial emergencies like natural disaster, job loss or medical expenses. It won’t erase your debt, and you’ll need to repay missed payments later either as a lump sum, through a repayment plan or by adding them to your loan balance. Forbearance is best viewed as a last resort, but it can buy you time when you need it most.
Smart money moves to manage payments
You don’t always need to change your loan to feel some relief. A few financial strategies can help reduce mortgage stress over time.
Adjust your budget and payment schedule
Making biweekly mortgage payments, instead of monthly ones, can slightly lower your loan term and interest over time. It also spreads costs more evenly. Budgeting carefully—especially by cutting nonessential spending—can improve your debt-to-income ratio and free up more money for housing costs. Just make sure your biweekly payments still meet the monthly minimum payment your lender requires.
Did you know?
Making biweekly payments chalks up to 26 half-payments per year—equal to 13 full payments. That one extra payment each year can reduce your principal faster.
Make extra principal payments when possible
Even modest extra payments—$50 or $100 a month—can help reduce your balance and lifetime interest. Pay extra only when your budget allows, but know that every bit counts toward building equity.
