Mortgage Recast Calculator
New payment and interest saved after a lump sum re-amortizes the loan.
What it does
A recast takes a lump sum you pay toward principal and spreads the remaining balance back over the months already left on the loan. The interest rate and the term stay put. The only thing that moves is the required monthly payment, which drops to match the smaller balance.
The default case shows the shape of the math. A $320,000 balance at 6.5 percent with 25 years left pays about $2,160.66 a month. Pay $50,000 and the balance falls to $270,000; re-amortized over the same 300 months, the payment becomes $1,823.06, a cut of $337.60 a month.
That is different from sending extra principal with each payment. Extra principal keeps the required payment the same and chops months off the end of the loan, which saves the most interest. A recast keeps the end date and lowers the bill instead, so it trades some interest savings for breathing room in the monthly budget.
Recasts usually cost a few hundred dollars and come with rules. Servicers commonly set a minimum lump sum, often $5,000 to $10,000, limit how soon after closing a recast can happen, and require the loan to be current. Fannie Mae and Freddie Mac both describe recasting in their servicing materials, but the request always goes through your servicer.
The interest saved figure assumes you keep the loan and the new payment for the full remaining term. Sell the house, refinance, or resume overpaying later and the actual savings shift. The number is a fair yardstick for comparing a recast against leaving things alone, not a promise of cash in hand.
How to use
- Enter the remaining balance from your latest statement.
- Enter the interest rate and the years left on the loan.
- Enter the lump sum you plan to apply to principal.
- Enter the lender's recast fee, or 0 if there is none.
- Read the new payment and the monthly savings first.
- Compare the fee payback with the interest saved before requesting the recast.
Formula
- P2
- Balance after the lump sum is applied to principal.
- i
- Monthly interest rate, the annual rate divided by 12.
- n
- Months remaining on the original term.
- fee
- Lender charge, divided by the monthly saving to get payback.
The recast keeps n fixed, which is what separates it from a refinance. Interest saved is the monthly cut multiplied by the months left, and the fee payback is the fee divided by the monthly cut, rounded up to whole months.
Worked example
Example: $50,000 recast on a $320,000 balance
Balance $320,000, rate 6.5 percent, 25 years left, lump sum $50,000, lender fee $500.
- The current payment: $320,000 at 6.5 percent over 300 months is $2,160.66.
- Apply the lump sum: $320,000 - $50,000 = $270,000.
- Re-amortize $270,000 over the same 300 months: $1,823.06.
- Monthly cut: $2,160.66 - $1,823.06 = $337.60.
- Interest saved to term: $101,281.07, the monthly cut spread across all 300 months.
- Fee payback: $500 / $337.60 = 1.48, so 2 months of the lower payment.
Reference table
| Lump sum | New payment | Saved each month | Fee payback |
|---|---|---|---|
| $10,000 | $2,093.14 | $67.52 | 8 months |
| $20,000 | $2,025.62 | $135.04 | 4 months |
| $50,000 | $1,823.06 | $337.60 | 2 months |
| $75,000 | $1,654.26 | $506.41 | 1 month |
| $100,000 | $1,485.46 | $675.21 | 1 month |
Limits
- Covers principal and interest only; taxes, insurance, and mortgage insurance sit outside this math.
- Assumes the servicer applies the lump sum to principal with no prepayment penalty.
- Minimum lump sums, timing rules, and fees vary by servicer and investor.
- Interest saved assumes the loan runs to term at the new payment.
Common mistakes
- Expecting the loan term to shrink; a recast keeps the original end date.
- Ignoring the fee when comparing a recast with extra principal payments.
- Assuming any lump sum qualifies when servicers often set minimums.
- Forgetting that a later refinance or home sale changes the interest saved.
- Requesting a recast on a delinquent loan, which servicers rarely allow.
Try it yourself
Quick checks. Answers sit tucked under each question.
A $200,000 balance at 5 percent with 20 years left is recast after a $25,000 lump sum, no fee. What is the new payment?
$1,154.92, down from $1,319.91, a saving of $164.99 a month.
The same recast carries a $500 fee. When does the fee pay for itself?
After 4 months, once the $164.99 monthly saving adds up past the fee.
Does a recast change the interest rate?
No. The rate and the months left stay the same; only the payment is re-amortized.
Questions
What is a mortgage recast?
A lump sum goes to principal and the servicer re-amortizes the smaller balance over the months already left, which lowers the required payment.
How is a recast different from paying extra principal?
Extra principal shortens the term while the payment stays the same. A recast keeps the term and cuts the payment.
What does a recast cost?
Often a few hundred dollars, and some servicers do it free. The example fee of $500 comes back after 2 months of lower payments.
Is there a minimum lump sum?
Commonly $5,000 to $10,000, and servicers also limit recasts to loans that are current and past any waiting period.
Does the interest rate change?
No. A recast is not a refinance: the rate, the term, and every other loan term stay as they were.
When does the fee pay for itself?
Divide the fee by the monthly saving and round up. $500 against $337.60 takes 2 months.
Sources
- Fannie Mae Servicing Guide: processing additional principal payments
- Fannie Mae Selling Guide: principal curtailments
- CFPB: how mortgage lenders calculate monthly payments