Mortgage Recast Calculator
See how a one-time lump-sum principal payment recasts your mortgage. Enter your loan details to compare your monthly P&I, total interest and fee break-even before and after the recast.
Compare Your Mortgage Before and After a Recast
Mortgage Recast Formula
Where:
- \(P\) — monthly principal-and-interest payment
- \(B\) — outstanding principal balance after the lump sum is applied: \(B = B_{\text{current}} - L\)
- \(L\) — lump-sum recast payment
- \(r\) — monthly interest rate: \(r = \frac{\text{annual rate}}{12 \times 100}\)
- \(m\) — number of months remaining in the original term
The recast keeps your interest rate and payoff date exactly as they are — only the required monthly payment is recalculated on the smaller balance using the standard amortization formula.
\[ P = \frac{B \cdot r}{1-(1+r)^{-m}} \qquad L = B_{\text{current}} - B \qquad S = P_{\text{old}} - P \]
\(P_{\text{old}}\) is the original scheduled payment, and \(S\) is the monthly savings. The total interest saved is the difference between the interest still owed on schedule and the interest owed after the recast.
\[ P = \frac{B \cdot r}{1-(1+r)^{-m}} \qquad S = P_{\text{old}} - P \qquad I_{\text{saved}} = \bigl(P_{\text{old}} \cdot m - B_{\text{current}}\bigr) - \bigl(P \cdot m - B\bigr) \]
\(r\) — monthly interest rate (annual rate ÷ 12); \(m\) — months remaining; \(L\) — lump-sum payment; \(P_{\text{old}}\) — current payment; \(P\) — payment after recast; \(S\) — monthly savings.
Mortgage Recast – Calculation Example
Example: you borrowed $300,000 at 6.5% for 30 years, have made 48 monthly payments, and now send a $50,000 lump sum with a $250 recast fee.
\[ r = \frac{6.5}{12 \times 100} = 0.0054167 \]
\[ P_{\text{old}} = \frac{300{,}000 \times 0.0054167}{1-(1.0054167)^{-360}} \approx 1{,}896.20 \]
\[ B_{\text{current}} = 300{,}000(1.0054167)^{48} - 1{,}896.20 \times \frac{(1.0054167)^{48}-1}{0.0054167} \approx 285{,}179 \]
\[ P = \frac{(285{,}179 - 50{,}000) \times 0.0054167}{1-(1.0054167)^{-312}} = \frac{235{,}179 \times 0.0054167}{0.81463} \approx 1{,}563.75 \]
Result: your P&I drops from $1,896.20 to about $1,563.75 — a monthly savings of roughly $332.45. Over the 312 months left on the loan you avoid about $53,700 in interest, and the $250 fee is recovered by the very first reduced payment.
How to Use the Mortgage Recast Calculator
- Enter the Original loan amount you initially borrowed.
- Enter your Interest rate — a recast does not change it, so use the rate on your statement.
- Select the Original term (15, 20 or 30 years).
- Enter Months already paid — how many monthly payments you have made so far.
- Under Current balance, choose Calculate from payments made to let the calculator amortize the balance, or Enter balance manually and type the payoff balance from your statement if you have made extra payments in the past.
- Enter the Lump-sum recast payment you plan to send (most lenders require at least $10,000).
- Enter the Recast fee your servicer charges, or 0 if it is free.
The results show your current monthly P&I, the new payment after the recast, your monthly savings, the total interest saved, and how quickly the fee pays for itself. You also get a comparison of what happens if you make the same lump sum without asking for a recast, plus year-by-year schedules for both scenarios.
What a Mortgage Recast Is
A recast (also called re-amortization) is when your servicer applies a large one-time principal payment to your loan and then recalculates your monthly principal-and-interest payment over the remaining term. Your interest rate stays the same, your payoff date stays the same, and no new loan is originated. The only thing that changes is the required monthly payment, which drops because it is now amortizing a smaller balance.
This makes a recast very different from a refinance, which replaces your loan with a new rate, a new term, and closing costs. It is also different from simply making extra principal payments: if you send a lump sum without a recast, your monthly payment stays the same and the loan is simply paid off early, which saves more interest but frees up no monthly cash flow. The calculator shows both paths side by side so you can weigh lower payments against maximum interest savings.
When reading the results, focus on the trade-off, not just the savings. The monthly savings is how much cash flow you get back every month — useful if you want breathing room in your budget, a lower debt-to-income ratio, or a safety margin against income loss. The total interest saved is what the recast saves you over the remaining term; the “same lump sum without a recast” figure shows you how much more interest you could save by keeping the payment unchanged instead, at the cost of a higher required payment.
Assumptions, Limitations and Practical Tips
- P&I only. All figures cover principal and interest only. Your full monthly payment also includes escrow items — property taxes, homeowner's insurance, and mortgage insurance — which are unaffected by a recast.
- Fixed-rate, fully amortizing loans. The calculation assumes a fixed rate and level payments. ARMs can often be recast too, but the future rate adjustments make the numbers here an approximation.
- Servicer requirements. Most lenders require the loan to be current, a minimum lump sum (commonly $10,000), a small fee (typically $150–$500), and sometimes a waiting period between recasts. Some loan types, such as certain government-backed or investor-modified loans, may not be eligible.
- Balance accuracy matters. If you have made extra payments before, choose Enter balance manually and use the exact payoff balance from your statement — the amortized estimate will not reflect past extra principal.
- Recast vs. payoff decision. A recast is best when you value lower required payments. If your goal is purely to minimize interest and you can comfortably afford the current payment, keeping the payment unchanged after the lump sum — or comparing against a payoff plan with extra payments — usually wins financially.
- Opportunity cost. Money used for the recast is money not invested or held as emergency savings; a lump sum applied to principal is illiquid. Consider whether earning a guaranteed, untaxed return equal to your mortgage rate beats your alternatives.
Finally, remember that a recast never costs you the rate: if interest rates have fallen well below yours, compare the recast savings with a refinance before committing, and if rates have risen, a recast is usually the clear winner since you get payment relief without touching your rate.
Frequently Asked Questions
How do I calculate my new payment after a recast by hand?
Subtract the lump sum from your current principal balance, then plug the result into the amortization formula: \( P = \frac{B \cdot r}{1-(1+r)^{-m}} \), where \(r\) is your annual rate divided by 12 and \(m\) is the months left on your original term. For example, $200,000 at 5% with 240 months remaining gives \(r = 0.004167\) and a required payment of about $1,319.91.
What is the minimum lump sum most lenders require for a recast?
Most servicers require a principal payment of at least $10,000, though some accept $5,000 and a few have no fixed floor.Many also require the loan to be current, that at least 6–12 months have passed since origination or the last recast, and will often limit you to one or two recasts over the life of the loan.Check with your servicer before sending money.
Does a recast change my interest rate, term, or payoff date?
No. A recast only re-amortizes the smaller remaining balance over the time left on your existing schedule, so your rate, term, and payoff date stay identical. This is the main difference from a refinance, which creates a brand-new loan with a new rate, new term, and closing costs that can run thousands of dollars versus a recast fee of roughly $150–$500.
Is a recast better than just making extra principal payments?
Financially, keeping your payment unchanged after a lump sum saves more interest, because the higher payment keeps the principal shrinking fast and the loan is retired early. A recast saves less total interest but lowers your required monthly payment, which frees up cash flow and lowers your debt-to-income ratio.The right choice depends on whether you value liquidity or maximum interest savings.
Will my total monthly payment drop by the full savings shown?
Not exactly. The calculator covers principal and interest only. Your complete payment also includes escrowed property taxes, homeowner's insurance, and possibly mortgage insurance or HOA dues, which do not change with a recast. If taxes or insurance rise the same year, your total payment could drop by less than expected or even stay flat.
Can I recast an adjustable-rate mortgage (ARM) or a government-backed loan?
Many servicers will recast ARMs, but the recalculated payment only holds until the next rate adjustment, so the savings figures become estimates. Eligibility also varies by investor: FHA, VA, and USDA loans, or loans that were modified, are often excluded or require investor approval. Conventional conforming loans are usually the easiest to recast, but always confirm with your servicer.
Does recasting remove private mortgage insurance (PMI)?
No. Recasting reduces your payment but does not automatically trigger a PMI review, because PMI removal depends on reaching a specific loan-to-value threshold or midpoint of the term. If your lump sum pushes your equity to 20% or more, request PMI removal separately; on conventional loans you can often cancel PMI once you reach 20% equity, which adds savings on top of the lower payment. Note: figures here are estimates; confirm details with your servicer.