Mortgage Recast Calculator
See what a lump sum against your mortgage does when the loan is recast: the new lower payment, interest saved, and how it compares with just paying extra.
How to use this calculator
- 1Enter your current balance, rate and how many years are left on the loan.
- 2Enter the lump sum you would put against the principal and the fee your servicer charges to recast.
- 3Compare the two savings figures: recasting lowers the payment, while keeping the old payment saves more interest and finishes sooner.
- 4Check with your servicer first — not every loan is eligible, and government-backed loans generally are not.
How the calculation works
New payment = PMT(balance − lump sum, rate, remaining term). The rate and the payoff date are unchanged- remaining term
- Months left on the existing loan — a recast does not extend or shorten it
- PMT
- Standard amortisation payment for a principal, rate and number of periods
A recast re-amortises the reduced balance over the *same* remaining term, which is what lowers the payment. This is the whole difference from an extra principal payment, which leaves the payment alone and shortens the term instead.
Because the rate never changes, a recast is not a refinance. There is no underwriting, no appraisal and no new closing costs — only a small administrative fee.
Making the lump sum payment and keeping the old payment always saves more interest than recasting, because more money is going to principal every month afterwards. Recasting buys monthly cash flow, and that flexibility has a measurable price.
Worked example
$50,000 against a $350,000 balance at 6.5%
- 1.The current payment on $350,000 at 6.5% over 25 years is about $2,363.
- 2.Re-amortising $300,000 over the same 25 years at the same rate gives about $2,025.
- 3.The payment falls roughly $338 a month while the payoff date stays put.
- 4.Keeping the $2,363 payment instead would clear the loan several years early and save more interest overall.
Result: About $338 a month lower, same payoff date
What a recast is, and why so few people know about it
A mortgage recast is a request to your servicer to re-amortise the loan after you make a large principal payment. The balance drops, the payment is recalculated over the remaining term, and the rate, term and loan all stay exactly as they were. Servicers charge a small fee — commonly $150 to $500 — and there is no credit check, no appraisal and no closing costs.
It solves a specific problem that has become far more common: you have a low rate you do not want to give up, and a lump sum you want to put to work. Refinancing would lower the payment but at today's rate, which could easily cost more than it saves. A recast lowers the payment while keeping the rate you already have.
Lenders rarely advertise it because it earns them almost nothing, which is why most borrowers with an eligible loan have never heard the term.
Recast, extra payments, or refinance
Three options exist once you have a lump sum and a mortgage, and they do genuinely different things.
- Recast — lowers the monthly payment, keeps the rate, keeps the payoff date. Best when you want breathing room in the monthly budget and already have a good rate.
- Extra principal payment without recasting — keeps the payment the same and shortens the term. Always saves more total interest than recasting, because every subsequent payment puts more toward principal. Best when cash flow is comfortable and you want the loan gone.
- Refinance — replaces the loan entirely. Only worth it if the new rate is meaningfully lower, since closing costs typically run 2–5% of the loan. Giving up a low rate to lower a payment is usually a bad trade.
Eligibility and the catch
Not every loan can be recast. Conventional loans held by Fannie Mae or Freddie Mac generally can, subject to servicer policy. FHA, VA and USDA loans generally cannot. Most servicers require a minimum lump sum — often $5,000 to $10,000, or a set percentage of the balance — and require the loan to be current.
The genuine trade-off is that recasting is the more expensive of the two prepayment routes in pure interest terms. Both start by reducing the balance by the same amount, but the recast then lowers the payment, so less money flows to principal each month afterwards. Keeping the original payment always finishes sooner and costs less. What the recast buys is a permanently lower required payment — real value for someone whose income has fallen or become irregular, and a needless cost for someone who could comfortably have kept paying the old amount.
What this assumes, and where it stops
Assumptions
- The loan is fixed-rate and fully amortising, and the servicer permits recasting.
- The payments shown are principal and interest only, excluding taxes, insurance and any mortgage insurance.
- The recast re-amortises over the same remaining term rather than resetting to a new full term.
- The lump sum is applied to principal before the recalculation.
Limitations
- FHA, VA and USDA loans generally cannot be recast, and servicer policies vary on conventional loans.
- Minimum lump sum requirements are not modelled and are commonly $5,000–$10,000 or a percentage of the balance.
- The opportunity cost of the lump sum — what it could have earned invested — is not considered.
- Escrowed taxes and insurance continue unchanged, so your total monthly outgoing falls by less than the figure shown.
Common questions
What is the difference between recasting and paying extra on my mortgage?
Both start by reducing the principal. A recast then re-amortises the smaller balance over the remaining term, which lowers your monthly payment while keeping the same payoff date. Paying extra without recasting leaves the payment unchanged and shortens the term instead. Keeping the original payment always saves more total interest — a recast trades some of that saving for lower required payments each month.
Is a recast better than refinancing?
It usually is when you already have a good rate. A recast keeps your existing rate and loan, costs a few hundred dollars, and needs no credit check or appraisal. A refinance replaces the loan at today's rate with closing costs of roughly 2–5%. If current rates are higher than yours, refinancing to lower a payment can easily cost more over time than it saves — a recast avoids that entirely.
Can any mortgage be recast?
No. Conventional loans backed by Fannie Mae or Freddie Mac generally can, subject to your servicer's own policy, but FHA, VA and USDA loans generally cannot. Most servicers also require a minimum lump sum — often $5,000 to $10,000 or a set percentage of the balance — and that the loan be current. Ask your servicer directly, since policy varies even among loans that are technically eligible.
Sources
- What is a mortgage recast? — US Consumer Financial Protection Bureau
Formula and content last reviewed on .
Results are estimates for information only, not professional advice.
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