Mortgage Recast Calculator
A mortgage recast lets you apply a lump sum toward your principal, then have your lender recalculate your monthly payment based on the new lower balance over the same remaining term and at the same interest rate. Unlike refinancing, a recast does not require a new appraisal, credit check, or large closing costs. It is ideal for borrowers who receive a windfall such as an inheritance or proceeds from selling a previous home and want to reduce their monthly obligation without changing their loan rate or term.
Mortgage recast formula
New Balance = Current Balance - Lump Sum
M(old) = Current Balance * r(1+r)^n / ((1+r)^n - 1)
M(new) = New Balance * r(1+r)^n / ((1+r)^n - 1)
Interest Saved = (M(old) - M(new)) * n
Where r is the monthly interest rate (annual rate / 12 / 100) and n is the remaining number of monthly payments. The same remaining term is used for both calculations since a recast does not change the payoff date.
Recast vs refinance comparison
- Recast: same rate, same term, lower payment; minimal fees; no credit check.
- Refinance: new rate possible, new term, closing costs of 2% to 5% of loan; credit check required.
- A recast makes sense when your existing rate is already competitive and you have a lump sum to apply.
- Minimum lump-sum requirements vary by servicer (commonly $5,000 to $10,000).
- FHA and VA loans do not allow recasting; most conventional loans do.
Mortgage recast: frequently asked questions
What is a mortgage recast?
A mortgage recast (also called re-amortization) occurs when you make a large lump-sum payment toward your principal and the lender recalculates your monthly payment based on the new lower balance, keeping the same interest rate and remaining term. The result is a lower monthly payment.
How is a recast different from refinancing?
A recast keeps your existing loan terms (rate and remaining term) and simply lowers the payment based on the reduced balance. Refinancing creates an entirely new loan, often resetting the term and potentially changing the rate. Recasting typically costs a small administrative fee (often $150 to $500), while refinancing costs 2% to 5% of the loan amount in closing costs.
Not all loans can be recast. Which loans qualify?
Most conventional conforming loans (Fannie Mae and Freddie Mac) allow recasting. FHA, VA, and USDA loans do not permit recasting. Jumbo loans may be eligible depending on the servicer. Contact your loan servicer to confirm eligibility and any minimum lump-sum requirements.
Does recasting save total interest?
Yes, because a lower balance accrues less interest each month over the remaining term. The total interest savings equal the difference between the total interest under the original remaining schedule and under the new lower balance schedule.
When does a recast make sense over extra payments?
A recast makes sense if you want to permanently lower your required monthly payment, such as after receiving an inheritance or home sale proceeds. Extra payments alone reduce total interest and term without lowering the required monthly payment. A recast gives cash-flow relief while still reducing total interest.
Official sources
- Consumer Financial Protection Bureau: Owning a Home.
- Fannie Mae: Homebuyers and Homeowners.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.