How to Lower Your Mortgage Payment: 7 Proven Ways

If your monthly mortgage payment feels like a heavy burden, you are not alone – and there are real, proven ways to bring that number down. Whether you want to refinance your mortgage for a lower rate or find ways to reduce your monthly costs without taking out a new loan, this guide walks through seven strategies to lower your mortgage payment.

The best approach depends on your situation: how much equity you have, your credit score, how long you plan to stay in your home, and your current interest rate. Let’s explore each option so you can decide what makes sense for you.

1. Refinance with a Lower Interest Rate

Refinancing is one of the most effective ways to lower your monthly mortgage payment. When you refinance your mortgage, you replace your existing mortgage with a new loan – ideally at a lower interest rate. Even a reduction of 0.5% to 1% can save you hundreds of dollars per month on a typical home loan.

According to Freddie Mac’s Primary Mortgage Market Survey, 30-year mortgage rates have fluctuated significantly in recent years. If your current rate is well above today’s market rate, refinancing could make sense.

To see how much you might save, use Wirly’s refinance calculator to compare your current payment against potential new terms. You can also explore top-rated refinance lenders to find competitive offers.

When refinancing makes sense

• You can qualify for a lower rate than your current one (typically at least 0.5% to 0.75% lower).
• You plan to stay in the home long enough to recoup closing costs – use the break-even calculator to check.
• Your credit score has improved since you took out your original loan, helping you qualify for a lower rate.

2. Consider Mortgage Recasting

Does recasting lower your mortgage payment? Yes, it does. Mortgage recasting involves making a large lump-sum payment toward your loan principal, then having your lender recalculate (or “recast”) your remaining monthly payments based on the lower balance. Your interest rate and loan term stay the same, but your monthly payment drops.

Recasting typically costs between $150 and $500, which is far less than the closing costs of refinancing. However, you need a significant chunk of cash to make it worthwhile – most lenders require a minimum lump-sum payment of $5,000 to $10,000.

This is a strong option if you have received a windfall, such as an inheritance or bonus, and want to lower your monthly mortgage payment without the hassle of applying for a new loan. Contact your mortgage lender to ask if they offer recasting on your loan type. Note that FHA and VA loans typically are not eligible for recasting.

3. Remove Private Mortgage Insurance

If you put less than 20% down when purchasing your home, your lender may have required you to pay private mortgage insurance (PMI). This added cost can range from 0.5% to 1.5% of the original loan amount per year, adding hundreds of dollars to your monthly payment.

According to the Consumer Financial Protection Bureau, you have the right to request cancellation of PMI once your loan balance reaches 80% of the home’s original value. Your lender must automatically cancel PMI when your balance drops to 78%.

How to get PMI removed

• Check your loan statements or contact your lender to see how much equity you have built.
• If your home has appreciated in value, you may be able to request a new appraisal to demonstrate that you owe less than 80% of the home’s current value.
• Once you reach 20% equity (meaning you owe less than 80% of the home’s value), contact your mortgage lender in writing to request PMI removal.

Eliminating PMI does not change your interest rate or loan term, but it can reduce your monthly payment noticeably.

4. Extend the Term of Your Mortgage

If you are currently on a 15-year or 20-year loan, refinancing into a 30-year mortgage will spread your remaining balance over more years, lowering your monthly payment. This is one of the most straightforward ways to lower your monthly mortgage payment.

However, this strategy comes with a significant trade-off. You will pay more interest over the life of the loan because you are extending the repayment period. For example, switching from a 15-year to a 30-year mortgage could lower your monthly payment by 30% or more, but your total interest costs could nearly double.

Use Wirly’s refinance calculator to compare the total cost of your current loan against a longer-term option before making this decision.

5. Shop Around for Lower Homeowners Insurance Rates

Your monthly mortgage payment likely includes homeowners insurance paid through an escrow account. If you have not compared insurance rates recently, you may be overpaying. Insurance premiums can vary significantly between providers.

Get quotes from at least three to five insurers. You can also reduce your premium by increasing your deductible, bundling with auto insurance, or asking about discounts for security systems and storm-resistant features. Even saving $30 to $50 per month on insurance directly reduces your total monthly payment.

6. Appeal Your Property Taxes

Property tax is another component of your monthly mortgage payment that is often collected through your escrow account. If your home’s assessed value seems too high, you may be able to appeal and lower your property tax bill.

According to the U.S. Census Bureau, property taxes vary widely by state and locality. Start by reviewing your property tax assessment, which your county or municipality issues annually. If comparable homes in your area are assessed at lower values, you have grounds for an appeal.

Steps to appeal your property tax

1. Review your property tax assessment notice carefully.
2. Research recent sale prices of similar homes in your neighborhood.
3. File a formal appeal with your local tax assessor’s office before the deadline.
4. Present your evidence at the hearing (or in writing, if allowed).

A successful appeal can reduce your monthly payment for years to come.

7. Explore Loan Assistance and Forbearance Options

If you are struggling to make your mortgage payment due to financial hardship, you may have options. Talk to your lender about mortgage forbearance, which temporarily reduces or suspends your payments. According to the Consumer Financial Protection Bureau, servicers are required to work with borrowers who are experiencing hardship to explore loss mitigation options.

According to CFPB complaint data from 2024, “struggling to pay mortgage” was a top issue across major servicers, representing 18% to 34% of complaints at some companies. If you feel your lender is not working with you in good faith, you can file a complaint with the CFPB.

Other assistance options include state and local hardship programs, loan modification (which permanently changes your loan terms), and federal programs for specific loan types such as FHA Streamline or VA Interest Rate Reduction Refinance Loans.

Risks and Considerations

Lowering your mortgage payment is not always the right move. Before you take action, consider these important trade-offs.

• Extending your loan term resets the clock. Refinancing into a new 30-year mortgage means you are starting over on amortization. You will pay significantly more interest over the life of the loan, even if your monthly payment drops.
• Closing costs add up. Refinancing typically costs 2% to 5% of the loan amount. If you are planning to move soon, you may not stay long enough to recoup those costs. Check your break-even timeline first.
• Watch for hidden fees. Appraisal fees, title insurance, and potential prepayment penalties on your existing mortgage can catch borrowers off guard. Ask your lender for a full Loan Estimate before committing.
• Multiple credit inquiries. Applying with several lenders results in hard inquiries on your credit report. However, if you rate-shop within a 14- to 45-day window, credit scoring models typically treat them as a single inquiry.
• Rate lock risks. If your rate lock expires before closing, you could end up with a higher rate. Ask your lender about lock periods and whether float-down options are available.
• Paying extra does not lower your required payment. Can you lower your mortgage payment by paying extra? Not directly. Extra payments reduce your principal and shorten the loan, but your required monthly payment stays the same unless you recast or refinance.

Frequently Asked Questions

Is it possible to lower your mortgage payment?

Yes. You can lower your mortgage payment through refinancing, recasting, removing PMI, extending your loan term, lowering your homeowners insurance, appealing property taxes, or pursuing loan assistance programs. The best option depends on your financial situation and homeowning goals.

How can I lower my mortgage payment without refinancing?

You have several options to reduce your monthly mortgage payment without taking out a new loan. You can request a mortgage recast, eliminate private mortgage insurance if you have at least 20% home equity, shop for cheaper homeowners insurance, or appeal your property tax assessment.

Can refinancing lower your mortgage payment?

Yes, refinancing can significantly lower your monthly mortgage payment – especially if you qualify for a lower interest rate than your current one. Use Wirly’s refinance calculator to estimate your potential savings. Keep in mind that closing costs need to be factored into your decision.

Does recasting lower your mortgage payment?

Yes. When you recast a mortgage, you make a large lump-sum payment toward the principal, and your lender recalculates your monthly payment based on the lower balance. Your interest rate and term remain the same, but your required monthly payment goes down.

How do I know if lowering my payment is worth it?

Calculate your break-even point using Wirly’s break-even calculator. If you plan to stay in your home beyond the break-even date, lowering your payment through refinancing may be worthwhile. If you are moving soon, the upfront costs may outweigh the monthly savings.

Sources

• Freddie Mac Primary Mortgage Market Survey – Historical and current mortgage rate data
• Consumer Financial Protection Bureau (CFPB) – Mortgage guidance on PMI cancellation, forbearance, and borrower rights
• CFPB Consumer Complaint Database – 2024 mortgage servicer complaint data and top issue categories
• U.S. Census Bureau – Property tax variation data by state and locality

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Wirly is not a lender or mortgage broker. Consult with a qualified financial professional or your mortgage lender before making decisions about refinancing or modifying your mortgage.

Sources

• Freddie Mac Primary Mortgage Market Survey – Weekly benchmark mortgage rate survey dating to 1971
• CFPB (Consumer Financial Protection Bureau) – Official consumer protection guidelines and mortgage resources
• U.S. Census Bureau – Housing and demographic data

---

Last reviewed: March 29, 2026
Fact-checked against: Freddie Mac PMMS, CFPB mortgage guidance, CFPB 2024 complaint data, U.S. Census Bureau housing data
Written by the Wirly editorial team. Our methodology: /methodology