6 ways to lower your mortgage payment

If you're looking to spend less money on housing each month, modifying your mortgage payments could help.

As of 2025, more than 65% of Americans were homeowners, according to the U.S. Census Bureau via Fred, and over half of homeowners have a mortgage — which can account for a large portion of housing costs. As the costs of necessities rise and Americans look to cut back on expenses, refinancing a mortgage can be one way to save money.

Refinancing at a lower rate is one strategy, but as rates linger in the mid-6% range, that may not be worth the costs.

Luckily, there are other — and often cheaper — ways to lower housing costs that don't involve a full-scale refinance. Below, CNBC Select shows you six ways to reduce your monthly housing costs by adjusting your mortgage.

Sometimes to save each month, you may have to spend more upfront. If you have a conventional mortgage and made a down payment of less than 20%, you likely had to take out private mortgage insurance (PMI), which protects your lender if you default on the loan.

PMI is usually rolled into your payment to your mortgage provider. It's typically between 0.5% and 5% of the annual total loan amount, which can add hundreds of dollars each month. Once you hit 20% in equity, you can request that the mortgage insurance be removed.

Borrowers with a government-backed Federal Housing Administration loan pay mortgage insurance premiums (MIP), which operate slightly differently from PMI. If you put less than 10% down, you'll have to pay MIP for the life of the loan — regardless of how much equity you accrue. However, if you put at least 10% down, you can cancel MIP after 11 years.

You can also convert your FHA loan into a conventional mortgage and build at least 20% equity before canceling PMI.

Mortgage lenders usually require a resident to have homeowners insurance.

If you want to cut monthly housing costs, shop around for a new homeowners insurance policy. If you find a lower rate, check if your provider is willing to match that. But be sure to factor in any cancellation fees you may face for switching, which could offset your savings.

Our insurance reporter recommends doing this every year when your policy renews to make sure you're getting the best deal.

Recasting your mortgage involves making a large lump-sum payment toward your balance, after which your lender re-amortizes the loan. With a smaller balance, you'll owe less in interest and pay less each month.

Recasting doesn't involve closing costs, but your lender may charge an administrative fee, which is usually a few hundred dollars.

Rules for recasting vary — and not all lenders offer the service — but you'll need to have enough equity in your home and a large enough payment to be approved.

If you can't afford your mortgage payments due to a major life event, like losing your job, you may qualify for a loan modification, which changes the terms of your loan to help avoid foreclosure.

It can involve lowering your interest rate, extending the repayment terms or even reducing the principal balance. The process and requirements vary by lender, but you'll need to provide documentation that verifies your financial situation. You may also need to complete a trial payment plan before you're fully approved to show you can follow the plan consistently.

A loan modification permanently adjusts your payments. If you're only looking for temporary relief, forbearance can reduce or pause your payments temporarily.

Both options affect your credit, however, and should only be considered if you're in a serious financial crisis and are unable to afford your mortgage.

Many homeowners with mortgages roll their property taxes, homeowners insurance and monthly mortgage into one payment that goes into an escrow account. That way, the lender knows the property is fully insured and not under threat of a tax lien.

If you're able to demonstrate that your local government has overassessed your home, you may be able to appeal and lower your property tax rate.

If none of these options work, you can try to refinance at a lower rate.

A rate-and-term refinance allows you to replace your existing mortgage with a new loan at a lower interest rate or a different timeline. Closing costs on a refinance mortgage can range from 2% to 6% of your total loan amount, so before committing, use a break-even calculator to determine how long it will take for the savings to offset the costs. Be sure to take into account how long you plan to stay in your home.

Try to go with lenders known for lower rates. We like Better Mortgage and FourLeaf Credit Union for that reason. Both lenders consistently offer lower-than-average rates and have nationwide availability.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage product review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best mortgage products.

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