How a mortgage recast works
When you recast your mortgage, you pay a lump sum toward the principal and ask your lender to re-amortize the loan: they recalculate your monthly payment from the new, lower balance over the same remaining term at the same interest rate. You don't need a credit check, an appraisal or a new loan, and the fee is usually a small flat charge.
The result is a permanently lower required monthly payment, and less total interest, because you owe less from day one.
What the calculator shows
- New monthly payment: your principal-and-interest payment after the lump sum is applied and the loan is re-amortized.
- Fee break-even: how many months of lower payments it takes to earn back the recast fee.
- Interest saved: remaining interest without the lump sum, minus remaining interest after recasting (net of the fee).
- The alternative: what happens if you make the same lump-sum payment but don't recast and keep paying your current amount. Your loan ends early and you save more interest, but your required payment doesn't drop.
The formula
B = balance after lump sum · r = annual rate ÷ 12 · n = months remaining
Payments shown are principal and interest only. Property taxes, homeowners insurance, PMI and HOA dues aren't affected by a recast (though a lower balance may help you remove PMI sooner, so ask your lender).
Worked example
You owe $320,000 at 6.75% with 27 years left, so your payment is about $2,149. You receive a $60,000 bonus or inheritance and pay it toward the loan.
- Recast: your payment drops to about $1,746, roughly $403 less every month. A $250 fee is recovered in the first month, and you save about $70,000 of interest over the life of the loan.
- Keep paying $2,149: no fee, and the loan is gone about 10 years early, saving roughly $199,000 of interest.
Neither choice is wrong. The second saves more on paper, but the recast locks in a lower bill, which is valuable if your income is irregular, you're approaching retirement, or you want room in the budget to invest or build savings.
When recasting makes sense
- You have a large one-off sum (home sale proceeds, bonus, inheritance) and want lower fixed costs.
- Your current rate is low, so refinancing would mean giving up a good rate.
- You bought a new home before selling the old one, and want to shrink the new payment once the sale closes.
- You want flexibility: you can still pay extra each month after a recast, but you're no longer required to.
When it may not
- Your loan is FHA, VA or USDA. These generally can't be recast.
- You'd drain your emergency fund to make the lump sum. Money in your house is hard to get back out quickly.
- You carry higher-interest debt. Paying off a 22% credit card beats prepaying a 6% mortgage.
- Market rates have dropped well below yours, in which case a refinance may be worth pricing out.
Frequently asked questions
What is a mortgage recast?
A recast (or re-amortization) is when you make a large lump-sum payment toward your principal and your lender recalculates your monthly payment based on the lower balance. Your interest rate and payoff date stay the same; only the payment goes down.
How much does it cost to recast a mortgage?
Lenders that offer recasting typically charge a flat administrative fee, often in the range of $150 to $500, and usually require a minimum lump sum (commonly $5,000 to $10,000 or more). Check your lender's exact terms. The calculator shows how many months of lower payments it takes to recover the fee.
Can every mortgage be recast?
No. Many conventional loans can be recast, but government-backed loans such as FHA, VA and USDA loans generally can't. Some lenders don't offer recasting at all. Call your servicer before you send a lump sum.
Is recasting better than refinancing?
They solve different problems. A refinance replaces your loan, can change your rate and term, and comes with closing costs that often run into thousands of dollars. A recast keeps your rate and costs far less, but needs cash up front. If current rates are well below yours, a refinance may save more; if your rate is already low, a recast keeps it.
Should I recast or just keep making the same payment?
If you keep your old payment after a lump sum, you'll pay the loan off years earlier and save more interest in total. Recasting trades some of that saving for a lower required payment and more monthly cash flow and flexibility. The calculator shows both side by side.
Sources
- What is a prepayment penalty?, Consumer Financial Protection Bureau
This calculator is for educational purposes and gives estimates based on the numbers you enter. It is not financial, tax or legal advice. Last reviewed October 2026.