Mortgage recast calculator
See how a lump sum and a recast lower your mortgage payment.
- Formula and assumptions shown
- Table and CSV export
- Runs in your browser
How it works
In a recast, you pay a lump sum toward principal and the servicer re-amortizes the lower balance over the same remaining term at the same rate. The payment falls, but the loan ends on the same date.
Old payment = B × r ÷ (1 − (1 + r)^−n). Recast payment = (B − lump sum) × r ÷ (1 − (1 + r)^−n), using the same r (annual rate ÷ 12) and remaining months n. Interest saved = old schedule interest − recast schedule interest.
If you make the same lump-sum payment without a recast and keep paying the old amount, the loan ends sooner and you usually save more interest. The calculator shows both so you can choose between a lower required payment and a faster payoff.
Assumptions
- The rate and remaining term stay the same; only the balance changes.
- The lump sum is applied to principal at the start, and the recast fee is paid in cash.
- Servicers decide eligibility, minimum lump sums, and fees; many government-backed loans cannot be recast.
- Taxes, insurance, and escrow are excluded.
Worked example
$300,000 at 6.5% with 300 months left and a $50,000 lump sum
The payment is $2,025.62 now and $1,688.02 after a recast, $337.60 less. Interest falls by $51,281.07 (before the $250 fee). Keeping the $2,025.62 payment after the same lump sum instead would pay the loan off 95 months sooner and save $143,645.76 of interest.
Step by step
- Monthly rate. 6.5% ÷ 12 = 0.541667% a month, applied over the 300 months that remain.
- Current payment. $300,000 amortized over 300 months at 0.541667% is $2,025.62 a month.
- Recast payment. After the $50,000 lump sum, $250,000 is re-amortized over the same 300 months: $1,688.02 a month, which is $2,025.62 − $1,688.02 = $337.60 less.
- Interest saved. Without the lump sum: 300 × $2,025.62 − $300,000 = $307,686.45 of interest. After the recast: 300 × $1,688.02 − $250,000 = $256,405.37. The difference is $51,281.07, or $51,031.07 after the $250 fee.
- The prepayment alternative. Paying the same $50,000 and keeping the $2,025.62 payment clears $250,000 in 205 months instead of 300, which is 95 months (7 years 11 months) sooner, and saves $143,645.76 of interest.
How to read your result
The headline, New monthly payment after recast, is the required payment once the lower balance is re-amortized at the same rate over the same remaining months. Payment reduction is the drop from the Current payment. Interest saved vs. no lump sum compares the recast schedule with leaving the loan untouched, and Net savings after recast fee subtracts the fee. All of that saving comes from owing $50,000 less at the same rate; the recast itself only changes how the remaining balance is spread over the months left.
The last two figures describe the alternative of making the same lump-sum payment without recasting: the required payment stays the same, so the extra goes to principal each month and the loan ends early. The chart shows three balances: no lump sum, recast, and lump sum with the old payment. The recast line ends on the same date as the original; the prepayment line reaches zero first.
Taxes, insurance, and escrow are not included, and the model does not value what the lump sum could have earned if invested or held as savings. A recast does not prevent extra payments later, so a borrower can take the lower required payment and still pay more when cash allows.
What changes the result most
- Size of the lump sum
- The payment reduction scales in proportion to the lump sum: at 6.5% with 300 months left, each $10,000 lowers the payment by $67.52. A $25,000 lump sum lowers it by $168.80 and saves $25,640.54 of interest.
- Months remaining
- With 180 months left on the same $300,000 balance, the $50,000 recast lowers the payment by $435.55, from $2,613.32 to $2,177.77, but saves only $28,399.66 of interest because there are fewer years for interest to build.
- Interest rate
- At 7.5% instead of 6.5%, the same recast lowers the payment by $369.50 and saves $60,848.68 of interest; keeping the old payment would end the loan 104 months early.
Questions
Recast or refinance?
A recast keeps your rate and term and usually costs a small fee. A refinance replaces the loan, can change the rate and term, and has closing costs. The refinance calculator compares a new loan.
Why would I recast instead of just prepaying?
Prepaying without a recast leaves the required payment unchanged. A recast lowers the required payment, which can free up monthly cash flow, at the cost of less interest saved.
Can every mortgage be recast?
No. It depends on the servicer and loan type. Ask your servicer about eligibility, the minimum lump sum, and the fee.
What does it mean to recast a mortgage?
Recasting, or re-amortizing, means paying a lump sum toward principal and having the servicer recalculate the monthly payment on the lower balance. The interest rate and the maturity date stay the same, so the payment falls but the loan does not end sooner. It is not a new loan, so there is no new application or appraisal in most cases, only the servicer’s fee and minimum lump sum.
How much does a mortgage recast cost?
The servicer sets the fee and the minimum lump sum, and both vary. The $250 in this calculator is a placeholder; enter the servicer’s actual fee. Because the fee is usually small relative to the interest saved, the larger cost is the lump sum itself, which is no longer available as cash.
More in Home & mortgage
Sources
- Fannie Mae: re-amortized (recast) mortgages
- CFPB: mortgage payment and balloon calculation
- CFPB: what is amortization?
These references explain the concepts behind the calculation. They do not endorse this site. Estimates leave out any cost or condition you did not enter.