By the HomeAffordLab team · Last updated October 27, 2026
The fastest ways to lower your mortgage payment are to remove PMI, refinance to a lower rate, recast the loan after a lump-sum payment, and cut the tax and insurance part of your payment. Depending on your loan, each can save from about $30 to several hundred dollars a month.
To show what each option is worth, this guide uses one example: a $400,000 home bought with 10% down, a $360,000 30-year loan at 7.32%, and a principal-and-interest payment of $2,473. After five years, the balance would be about $340,007.
Key takeaways
- Removing PMI on our example loan saves about $150 a month.
- Refinancing the remaining balance from 7.32% to 6.32% saves about $364 a month on a new 30-year term, with a break-even of around 19 months if closing costs are 2%.
- A recast after a $30,000 lump-sum payment lowers the payment by about $218 without changing the rate.
- Shopping insurance and appealing your tax assessment can each save around $30 a month.
- Stretching the term lowers the payment but usually raises the total interest you pay.
In this guide: Options at a glance · Remove PMI · Refinance · Recast · Lower taxes and insurance · Drop FHA mortgage insurance · If you can’t pay · FAQ
Mortgage Payment Calculator
Your full monthly payment: principal, interest, property tax, homeowners insurance, PMI or FHA mortgage insurance, and HOA dues.
Loan balance and what you pay over time
Each year’s principal and interest, and the balance left at year end.
Year-by-year amortization table
| Year | Principal | Interest | Balance |
|---|
Ways to lower your mortgage payment at a glance
| Option | Monthly savings in our example | Upfront cost | Best when |
|---|---|---|---|
| Remove PMI | About $150 | Possibly an appraisal | You have about 20% equity |
| Refinance to a rate 1 point lower (new 30-year loan) | About $364 | Closing costs, often 2% to 5% | Rates have fallen and you’ll stay past the break-even |
| Refinance to a rate 1 point lower (25-year loan) | About $215 | Closing costs | You want savings without adding years |
| Recast with a $30,000 payment | About $218 | A recast fee, often a few hundred dollars | You have a lump sum and like your rate |
| Appeal property tax (10% lower assessment) | About $33 | Usually little or none | Your assessment is above similar homes |
| Shop homeowners insurance (15% lower premium) | About $31 | None | Your premium has jumped |
1. Remove private mortgage insurance
If you have a conventional loan with PMI, you can ask your servicer to cancel it once your balance reaches 80% of the home’s original value, and it ends automatically at 78%. With 0.5% PMI on our $360,000 loan, that’s about $150 a month. If your home’s value has risen, a new appraisal may let you remove PMI sooner. Our PMI guide explains the rules.
2. Refinance to a lower rate
If rates fall, refinancing the remaining $340,007 balance from 7.32% to 6.32% would cut principal and interest to about $2,109, a savings of about $364 a month. With closing costs of 2%, about $6,800, you’d break even in roughly 19 months.
There’s a catch: a new 30-year loan restarts the clock, so you’d pay for 35 years in total. Choosing a 25-year term instead keeps your original payoff date, with a payment of about $2,258, still about $215 less than today. Compare 15-year and 30-year options in our term comparison.
Before refinancing, check:
- Your credit score and equity, which drive the rate you’ll be offered.
- The total closing costs on the Loan Estimate, not just the rate.
- How long you’ll stay in the home compared with the break-even.
3. Recast your mortgage
A recast, or re-amortization, lets you make a large payment toward principal and have the lender recalculate the monthly payment over the remaining term, at the same rate. In our example, paying $30,000 after five years lowers the payment to about $2,255, about $218 less, with 25 years left.
Recasting is usually much cheaper than refinancing, with fees often in the hundreds of dollars, but not every servicer offers it, and government-backed loans such as FHA and VA loans generally aren’t eligible. Ask your servicer about its minimum lump sum and fee.
4. Lower the tax and insurance part of your payment
- Shop homeowners insurance. Compare quotes every year or two, raise your deductible if you have savings, and bundle with auto insurance. A 15% lower premium on $2,450 saves about $31 a month.
- Appeal your property tax assessment. If your assessed value is higher than similar homes, file an appeal. A 10% lower assessment on a $400,000 home with a 1% tax rate saves about $33 a month.
- Claim exemptions. Homestead, senior, veteran, and disability exemptions can reduce your tax bill in many states.
- Ask for a new escrow analysis after any of these changes so your payment drops right away. Our escrow guide explains how.
5. Get rid of FHA mortgage insurance
FHA mortgage insurance with less than 10% down lasts for the life of the loan. Once you have about 20% equity, refinancing into a conventional loan without PMI removes it. On a typical FHA loan, the annual premium is 0.55% of the loan, about $155 a month on a $337,750 base loan. Our FHA calculator shows your exact premium.
If you’re struggling to make payments
Call your servicer before you miss a payment. Options can include forbearance, a repayment plan, or a loan modification that changes the rate, term, or balance. A HUD-approved housing counselor can help you understand your choices for free or at low cost. Avoid anyone who charges upfront fees to “save” your home.
Frequently asked questions
Can I lower my mortgage payment without refinancing?
Yes. Removing PMI, recasting, lowering your property taxes, and shopping your insurance all reduce the payment without a new loan.
Does paying extra principal lower my monthly payment?
Not on its own. Extra payments shorten the loan and save interest, but the required payment stays the same unless you recast.
How much does a rate drop need to be to refinance?
There’s no fixed rule. Divide the closing costs by the monthly savings to find the break-even, and refinance only if you’ll keep the loan well past that point.
Can I extend my loan term to lower my payment?
Through a refinance or loan modification, yes. It lowers the payment but usually increases the total interest you pay.
The bottom line
Start with the options that cost little or nothing: remove PMI as soon as you qualify, shop your insurance, and check your tax assessment. If you have a lump sum, a recast can cut your payment without changing your rate. If rates drop about a point or more, a refinance may save the most, as long as you’ll stay past the break-even. Model each option in the calculator above.
Estimates only. HomeAffordLab is not a lender and does not provide financial advice. This page may contain ads. See our Advertising Disclosure.
Sources: CFPB: When can I remove PMI? · HUD: Housing counseling · Freddie Mac Primary Mortgage Market Survey · Payment figures calculated by HomeAffordLab