Mortgage Recast Calculator
See what a lump sum does to your mortgage payment after a recast, side by side with simply prepaying: new payment, interest saved, and which strategy wins.
New payment after recast
$1,856.82
- Current payment
- $2,025.62
- Monthly payment reduction
The cash-flow relief the recast buys.
- $168.80
- Interest saved by recasting
Versus doing nothing, before the fee.
- $25,641.69
- Interest saved by prepaying instead
The same lump with your old payment continuing: usually the bigger saving.
- $84,187.55
- Term cut by prepaying instead
- 53 months
- Recast fee
- $250.00
Three ways to use the same lump sum
| Strategy | Monthly payment | Payoff | Total interest |
|---|---|---|---|
| Do nothing | $2,025.62 | 300 months | $307,687.31 |
| Recast (lower payment, same term) | $1,856.82 | 300 months | $282,045.62 |
| Prepay only (same payment, shorter term) | $2,025.62 | 247 months | $223,499.76 |
Quick answer: With the example inputs this page loads by default, the headline result (New payment after recast) comes to $1,856.82. See what a lump sum does to your mortgage payment after a recast, side by side with simply prepaying: new payment, interest saved, and which strategy wins. Change any input above and every figure updates instantly in your browser.
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A mortgage recast applies a lump sum to your principal and re-amortizes the loan over the same remaining term, lowering the payment while keeping your rate; a $25,000 lump on a $300,000 balance at 6.5 percent cuts the payment by about $169 a month for a fee that is typically a few hundred dollars. This calculator prices the recast against prepaying without one.
What this result means
The comparison table is the decision: a recast buys monthly relief, while the same lump applied as a plain prepayment (keeping your old payment) saves far more interest by shortening the term, roughly three times more in the default example. Recast when cash flow is the problem; prepay when total cost is. Net the fee out before deciding: the interest-saved figure is before the $150 to $500 processing fee, prepaying has no fee, so the smaller the lump, the more the fee tilts the choice toward plain prepayment. Recasting keeps your existing rate, which cuts both ways: it is the cheap move when your rate is below market (no refinance needed), and it never fixes a rate that is too high. Not every loan qualifies: FHA and VA loans generally cannot recast, and servicers set minimum lump sums. Not advice.
Assumptions
- A recast applies the lump sum to principal and re-amortizes the reduced balance at your existing rate over the same remaining months (the consumer lump-sum re-amortization sense of the word, distinct from Regulation Z's ARM recast). Payments and schedules come from the same shared amortization engine as the mortgage calculator.
- The prepay-only comparison applies the identical lump and keeps your current payment running against the reduced balance, which shortens the term; its payoff and interest come from a month-by-month fixed-payment simulation with cent-rounded interest.
- Interest-saved figures compare each strategy's remaining interest against doing nothing, before the recast fee (shown separately; prepaying has no fee). Taxes, escrow, PMI changes, and investment alternatives for the lump sum are not modeled.
- Eligibility is not universal: FHA and VA loans generally cannot be recast, jumbo and portfolio loans vary, and servicers set minimum lump sums (commonly $5,000 to $10,000) and processing fees. Your servicer's terms govern.
- This is an estimate for educational purposes only, not financial advice.
Key terms
Definitions for the terms this calculator uses, in our finance glossary .
How it works
A recast is one arithmetic move: subtract the lump sum from the balance, then recompute the standard amortizing payment on the reduced balance over the same remaining months at the same rate. Nothing else about the loan changes, which is why servicers charge a processing fee instead of closing costs. (This is the consumer lump-sum sense of “recast,” distinct from Regulation Z’s ARM recast.)
The honest comparison is against prepaying without the recast: apply the identical lump, keep the old payment, and let it retire the loan early. The calculator simulates that path month by month with cent-rounded interest and puts all three strategies, do nothing, recast, prepay, in one table. The pattern is general: the recast converts the lump into monthly relief, the prepayment converts it into a shorter term and a much larger interest saving.
Worked example
$300,000 remaining at 6.5 percent with 300 months left, and a $25,000 lump sum.
- Do nothing: $2,025.62 a month, $307,687.31 of remaining interest.
- Recast: $275,000 re-amortized over 300 months = $1,856.82, a $168.80 monthly cut, saving $25,641.69 of interest (minus a ~$250 fee).
- Prepay only: keep paying $2,025.62 and the loan ends in 247 months, saving $84,187.55, more than three times the recast’s saving, with no fee.
Scope and limitations
Fixed-rate level-payment loans; taxes, escrow, PMI changes, and investing the lump elsewhere are not modeled. All three schedules are simulated month by month with payments and interest rounded to the cent, and the final payment adjusts to clear the balance. Over hundreds of months that rounding can drift a few dollars from closed-form annuity math, most visibly at small lump sums. Eligibility varies: conventional (Fannie/Freddie) loans generally can recast, FHA and VA generally cannot, and servicers set minimum lumps (commonly $5,000 to $10,000) and fees ($150 to $500). This is an estimate for education, not financial advice.
Sources
Frequently asked questions
- What is the difference between a recast and a refinance?
- A recast keeps your loan, rate, and term and just re-amortizes after a lump-sum principal payment, for a small processing fee. A refinance replaces the loan entirely at today's rates with full closing costs. When your existing rate is better than the market's, a recast is the way to lower the payment without giving that rate up.
- Is it better to recast or just make extra payments?
- They solve different problems. The identical lump sum saves far more interest as a plain prepayment because your unchanged payment then retires the loan years early, while a recast converts the lump into monthly cash-flow relief instead. Choose by which constraint binds: monthly budget, recast; lifetime cost, prepay.
- How much does a mortgage recast cost?
- Typically a processing fee of about $150 to $500, far below refinance closing costs, plus the lump sum itself, which servicers commonly require to be at least $5,000 to $10,000. There is no credit check or appraisal because the loan terms other than the payment do not change.
- Can every mortgage be recast?
- No. Conventional loans backed by Fannie Mae and Freddie Mac generally can; FHA and VA loans generally cannot, and jumbo or portfolio loans depend on the lender. The servicer, not the original lender, runs the process, so the first step is asking yours whether your loan qualifies and on what terms.
- Does a recast lower my interest rate?
- No, nothing about the rate or term changes; only the balance drops and the payment is recomputed. The interest you save comes entirely from carrying a smaller balance. If your rate is above the market, compare a refinance instead; the refinance calculator prices that break-even.
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By Sam Sage Last reviewed .