How to Lower Your Mortgage Payment

If you’re looking for ways to lower your monthly mortgage payment, you may have more options than you think.

This information is worth knowing right now. The latest statistics from the Federal Reserve Bank of New York’s Center for Microeconomic Data show that in Q4 of 2025, mortgage delinquencies among the lowest-income families were up to almost 3%, compared to only 0.5% in 2021.[1]

The number of people having trouble paying their mortgage is increasing—and in a turbulent, inflationary economy, this trend could continue.

If you’re looking to lower your mortgage payment, there are specific actions you can take right now. On one end, you’ve got little fixes like cleaning up your credit or bundling insurance, and on the extreme end, you’ve got government programs that can buy you valuable time to improve your finances.

Let’s look at your options, starting small and going all the way up to the biggest interventions.

Best ways to lower your mortgage payment

Note: Savings estimates are based on a $350,000–$400,000 loan balance at April 2026 rates (30-year fixed at 6.37%, 15-year fixed at 5.74% per Freddie Mac PMMS). PMI savings assume a 1.5% PMI rate on a 10% down payment (Fifth Third Bank). Credit tier savings per myFICO rate spreads. Insurance bundling savings per U.S. News & World Report (2026). Tax exemption range reflects national average rate of 0.90%. Actual savings vary by loan balance, location, credit profile, and lender.

» TRY BIWEEKLY: Our biweekly payment calculator shows how splitting your payment can reduce total interest.

Which strategy fits your situation?

Not every option makes sense for every homeowner. Start by identifying which situation matches yours, then focus on the strategies that apply.

Your situation	Best starting moves	Why
You locked in above 7% in 2023	Refinance, clean up credit first if needed	Rates are lower now; break-even in ~2 years
You have 20%+ equity but still pay PMI	Remove PMI, shop insurance	Quickest wins with minimal paperwork
You have cash on hand but your rate is okay	Recast your mortgage	Lowers payment without changing rate or term
Monthly budget is tight across all bills	Cash-out refi to consolidate debt	May raise mortgage slightly but cuts total monthly outflow
You can't make next month’s payment	Contact lender for forbearance	Buys time; HUD counselors can guide you for free
You’re on a 15-year and need relief	Extend to a 30-year term	Biggest per-month savings (~$830) but adds years

Most homeowners will benefit from stacking strategies. Start with the low-effort wins (PMI removal, insurance shopping, tax exemptions), then evaluate whether refinancing or recasting makes sense for your rate and equity position.

Controlling what you can control

This section covers some measures you can take that are short of making changes to your mortgage or asking for outside help. These are simple things you can control to help reduce your monthly mortgage costs.

Get rid of PMI

You were obligated to take on private mortgage insurance (PMI) if you put less than 20% down on your home. While your rate depends on your credit score, PMI can cost you up to 1.5% of your loan amount per year.[2] This can easily come to several hundred dollars a month.

If you bought a $350,000 home, put 10% down, and qualified for a PMI rate of 1.5%, you would be responsible for a monthly PMI payment of just under $400. In that situation, simply getting rid of PMI would save you almost $5,000 a year. So how do you do that?

“If you have 20% equity in the home, either through the home going up in value or through making payments, you should be able to get rid of your PMI,” says Shaheedah Hill, a Realtor and business expert based in Georgia who has personal experience with shedding PMI.

“When I bought my house, I was able to get rid of my PMI after the first three years of ownership. I put 5% down, so you know I didn't make enough payments in those first three years to get 20% [equity]. But the home that I bought went up in value pretty quickly because I was in a new construction community.”

Hill found it surprisingly easy to have her PMI obligation removed from her mortgage. “I called my mortgage company, they sent an appraiser out to make sure I had the value there, and by my next payment the PMI was removed.”

Sometimes getting what you want really is as easy as asking for it. Hill notes that, thanks to a hot market, most recent buyers should have enough equity to get their PMI removed. “If you bought anytime during or before the pandemic, then you likely have 20% equity in your home,” she says.

Clean up your credit

If you can significantly improve your credit score from what it was when you signed your mortgage, you can refinance into a lower interest rate.

There’s no sexy secret to improving your credit. Experian says that you just have to make payments on time, pay down high-interest debt, and monitor your credit report. If you find errors on the report, dispute them and try to get them removed. Once your score is improved, talk to your lender about a lower-rate refinance.

It can take months or years to improve your credit score, depending on how much work you have to do, but credit agency Equifax says that improvements can show up in 30-45 days.

Even small improvements can make a big difference over the long term. The latest spread in mortgage rates by credit tier shows that a buyer with the best credit tier will pay over 0.6% less than someone with the lowest credit tier.[3] For a home around $400,000, that translates to $150 more per monthly payment, and just under $60,000 over the life of the loan.

Seek out cheaper home insurance

The average cost of home insurance has risen by over 40% in the past six years; in some states, rates have risen almost twice that, led by Colorado at a staggering 76%.

While homeowners insurance is a necessity, “you want to make sure you are getting the best rate,” says Shaheedah Hill. “Ask your current insurance company, then look at at least two additional home insurance companies and see how much it would cost for them.”

If comparison shopping doesn’t save you enough money, consider a cheaper plan. “You can also try to increase your deductible,” Hill says. “Just make sure you have the insurance for very expensive catastrophes. If you have a $1,000 deductible, can you go up to $3,000? How much would that save you? You can use some of the money to build up an emergency fund so you can cover small costs.”

Take advantage of all tax exemptions

When home values go up, so do property taxes. So many people deal with a property tax bill that’s quite a bit higher than it was just a few years ago.

Since your property taxes are split into monthly portions and escrowed by being bundled in with your monthly mortgage payment, reducing those taxes will also reduce your mortgage payment.

What many don’t realize is that there are property tax exemptions that can reduce the assessed taxable value of your home, which then reduces the amount you pay each month towards your property taxes.

 “Every city, county, [and] state is a little bit different as to how they apply property tax exemptions or discounts,” says Shaheedah Hill. “But veteran disability exemptions, homestead exemptions, senior exemptions— all of those things can help you save on your property taxes.”

Homestead exemptions can work differently depending on the location, but they typically offer either a percentage-based reduction (50% for seniors, for example) or a fixed dollar amount discount ($50,000, for example) of your home’s assessed value.

So if you have a $500,000 house in a locality where the property tax rate is at the national average of 0.90%, a 50% homestead exemption would reduce your home’s assessed taxable value to $250,000, saving you 50%, or $2,250, on your property taxes. If you had a $50,000 homestead exemption, that would reduce your home’s taxable value to $450,000, saving you $450.

Important point: the onus is on the homeowner to determine which local exemptions apply, whether they qualify, and to apply for them.

“It's not going to be something that's automatically given to you,” Hill says. “Make sure you are reaching out, looking at the websites for your city or your county, and finding out if you are getting all of the exemptions that you qualify for. If you are having trouble online, it's worth a visit to the office for them to look at your age and any other qualifications.”

Refinancing

This one is fairly simple: if the refinance rate is lower than the rate you got when you took out your mortgage, you should at least consider refinancing. Experts suggest that you should expect at least a 1% reduction to get substantial savings.

If you took out a mortgage during the peak rate period in 2023, when mortgage rates reached 7.79%, you could save a lot of money by refinancing.[5] As of April 2026, the 30-year fixed rate averages 6.37%, which translates to meaningful monthly savings on a large balance.[6]

Just remember that refinancing means you’re originating a whole new loan, which means you’re responsible for closing costs of 2-5% of the loan. Carefully compare your total month-to-month savings and the costs of refinancing to see if it’s actually worth it.

How to calculate your break-even point

The break-even point tells you how many months it takes for your monthly savings to recoup the closing costs of the refi. Here's the formula:

Break-even point = Total closing costs ÷ Monthly savings

Say you're refinancing a $350,000 mortgage from 7.79% to 6.37%. Your current monthly payment (principal and interest) is about $2,520. At 6.37%, the new payment drops to roughly $2,185, saving you $335 per month.

If your closing costs total $8,750 (2.5% of the loan), your break-even calculation looks like this:

Current rate	7.79%
New rate	6.37%
Loan balance	$350,000
Current monthly P&I	$2,520
New monthly P&I	$2,185
Monthly savings	$335
Closing costs (2.5%)	$8,750
Break-even point	26 months

In this scenario, you'd recoup your closing costs in about 26 months. If you plan to stay in your home longer than that, refinancing makes financial sense. If you're planning to move within two years, the math probably doesn't work.

Ready to refinance? Compare all your loan options in minutes. Fill out a quick form and we'll connect you with one of our loan officers today.

Want to run the numbers yourself? Use our mortgage calculator to model your own break-even scenario with current rates.

Recasting

Recasting the mortgage is when you pay a lump sum towards the principal, while keeping the rest of the terms the same. This will lower your monthly payment, since the amount you’re paying interest on is now lower.

Bradley of Best Interest Financial draws a clear distinction between recasting and simply making extra payments.

"If you pay more toward your principal, you're shaving time off the back end of the loan," he says. "So instead of paying it off in 15 years, you might pay it off in 12. With a recast, you take that lump sum and call your lender. They apply it to reduce the principal, and then they recalculate your payments. It's still based on the normal term of the loan, the normal rate, everything. So then you would have a lower payment because now you have a lower principal."

You'll pay a recasting fee, usually $200–$500, and most lenders require a minimum lump-sum payment. You can't recast certain government-backed mortgages (USDA, VA, or FHA).

If it's monthly relief you're after (not a shorter payoff timeline), recasting is often the simpler, cheaper move compared to refinancing.

Re-terming (extending the loan term)

This is when you lengthen the term of your mortgage. If you have, say, a 15-year mortgage, you can get a lot of savings by simply converting it to a 30-year mortgage.

A 15-year mortgage on a $400,000 balance at April 2026 rates comes to a monthly payment of around $3,330. Extending that to a 30-year reduces the payment to roughly $2,500, a savings of about $830 per month.

This comes with some obvious downsides. You’re adding years of additional payments onto your loan, and you’ll accumulate equity at a much slower pace.

Not sure whether to tap equity or refinance? Compare a home equity loan vs. refinance.

Asking for help

If you get to a point where you know you aren’t going to be able to make your next mortgage payment, your first step is to contact your lender. They may be able to arrange forbearance, which is a period during which your payments are paused or reduced.

There are many different kinds of forbearance:

• Payments may be paused for a time (often 6-12 months) and then spread out over the rest of the mortgage.
• Payments may be paused and then tacked onto the end of the mortgage.
• Payments may be paused, and then, at the end of the forbearance period, you’ll have to pay all those missed payments in a lump sum.

Be sure you understand the details of any forbearance agreement you enter into with your lender.

Loan modifications

You can also pursue a loan modification, which involves reducing your interest rate or principal, or restructuring your loan to reduce your monthly payment.

A good place to start if you’re thinking of pursuing any of these options is with a Department of Housing and Urban Development (HUD) certified housing counselor. These are government-approved professionals who can walk you through all your options.

If you’ve already been served with foreclosure papers, you can access resources, including potential financial or legal aid, at your local 211 site.

Compare your mortgage options with Best Interest today. Answer a few questions and we’ll connect you with a dedicated loan officer in minutes to guide you through available loan options and rates—no social or date of birth required.

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