WiseCalcs

Mortgage recast calculator

Enter your current balance, interest rate, years remaining, the lump-sum payment you plan to make, and the recast fee. The calculator shows your new payment, monthly savings, total interest saved, and how long it takes to break even on the fee.

Updated

Use it to see whether a mortgage recast lowers your monthly payment and how many months it takes for the savings to cover the recast fee. It also compares recasting with paying extra each month instead.

USD
%
yr
USD
USD

New monthly payment

$1,482

Current
$1,611
After recast
$1,482

Pay extra instead: Payoff in 251 mo. Paying extra saves about $40,359 more interest.

Monthly savings
$129
Total interest saved
$18,658
Break-even on fee
2 mo

The result updates as you type. Your new payment is recalculated on the lower balance over the same remaining term. The monthly savings show how much less you'll pay each month, and the break-even shows when the savings repay the recast fee.

How does it work?

A recast keeps the same term and rate but recalculates the payment on the lower balance. Break-even is shown only when the new payment is lower. The comparison with paying extra instead assumes you continue the old payment every month, which pays off the loan early.

Mortgage recast payment formula

New payment=(balance−lump sum)⋅r⋅(1+r)n(1+r)n−1\text{New payment} = \frac{(\text{balance} - \text{lump sum}) \cdot r \cdot (1+r)^n}{(1+r)^n - 1}
balance
Current mortgage balance before the lump-sum payment.
lump sum
One-time principal payment applied to reduce the balance.
r
Monthly interest rate (annual rate divided by 12).
n
Number of monthly payments remaining on the original term.

A 250,000 balance at 6% with 25 years (300 months) left has a payment of about 1,610.75. After a 20,000 lump sum plus a 250 recast fee, the new balance is 230,000 and the new payment drops to about 1,481.89, saving 128.86 per month; the fee breaks even in about 2 months.

Method & sources

The lump-sum payment reduces the principal; the recast recalculates the payment on the new balance over the same remaining term. Interest rate and remaining years stay the same after recast. Break-even divides the recast fee by the monthly savings and is shown only when the new payment is lower.

How we calculate

  • The lump-sum payment reduces the principal; the recast recalculates the payment on the new balance over the same remaining term.
  • Interest rate and remaining years stay the same after recast.
  • Break-even divides the recast fee by the monthly savings and is shown only when the new payment is lower.
  • The comparison with paying extra assumes you continue making the old (higher) payment every month on the reduced balance, which pays off the loan early.
  • Recasting typically requires a minimum lump-sum payment (often $5,000-$10,000) and may have eligibility restrictions; check with your lender.

Limitations

  • FHA and VA loans typically do not allow recasts; conventional loans usually do.
  • Lender-specific policies (minimum lump sum, maximum recast frequency, fee amount) are not modeled; you supply the recast fee yourself.
  • Tax, insurance, PMI, and cash-out scenarios are not included.
  • The payoff-early comparison assumes no prepayment penalties and that the lender applies extra payments directly to principal.

Rounding

Payments are rounded to whole dollars and the break-even is rounded up to a whole month for display. The calculation uses full precision.

What is a mortgage recast?

A mortgage recast recalculates your monthly payment on a lower balance after you make a lump-sum principal payment, keeping the same interest rate and remaining term. It's not a refinance — you keep your existing loan. The lender reamortizes the balance over the years you have left, which lowers your monthly payment.

Recast vs. refinance

Recasting keeps your current rate and term but recalculates the payment on a lower balance. Refinancing replaces the loan entirely with a new rate, new term, and typically higher closing costs. Recast fees are usually much lower (often $150-$500), while refinance closing costs can be thousands. If your rate is already good, recasting may be cheaper.

Which loans allow recasting?

Conventional loans typically allow recasts. FHA and VA loans usually do not. Lenders often require a minimum lump-sum payment, commonly $5,000 to $10,000, and may limit how often you can recast. Check with your lender for specific eligibility rules and fees.

How to use this calculator

  1. Enter your current mortgage balance, interest rate, and years remaining.
  2. Enter the lump-sum principal payment you plan to make.
  3. Enter the recast fee your lender charges (typically $150-$500).
  4. Read your new monthly payment, monthly savings, total interest saved, and break-even months below.

A worked example

A $250,000 balance at 6% with 25 years (300 months) left has a monthly payment of about $1,611. After a $20,000 lump-sum payment plus a $250 recast fee, the new balance is $230,000 and the new payment drops to about $1,482 — saving $129 per month. The recast fee breaks even in about 2 months. Over the remaining 25 years, you save roughly $38,400 in interest compared to keeping the old payment.

Recast or pay extra each month?

This calculator also shows what happens if you keep making the old (higher) payment on the new balance instead of recasting. That strategy pays off the loan early and can save even more interest, but your monthly payment stays the same. Recasting lowers your monthly payment right away, which frees up cash flow. Choose recasting if you want lower payments; choose paying extra if you want to pay off the loan faster.

Common mistakes

  • Assuming all loans allow recasts — FHA and VA loans typically do not.
  • Forgetting the recast fee when comparing costs. It's small, but it affects your break-even.
  • Not checking your lender's minimum lump-sum requirement or eligibility rules before planning a recast.
  • Confusing recast with refinance — a recast keeps your existing loan and rate, while a refinance is a new loan.

When recasting is useful

Deciding whether to recast after receiving a windfall (bonus, inheritance, home sale proceeds), comparing a recast with a refinance when rates haven't dropped much, or checking whether lowering your payment is worth the fee.

FAQ

How is the new payment calculated?
The new payment uses the standard amortizing loan formula on your balance minus the lump sum, over the same remaining term and rate. If you have 25 years left, you still have 25 years left after recast — the term doesn't change.
Does recasting change my interest rate?
No. Your interest rate stays the same. Only the balance and payment change.
How much does a recast cost?
Recast fees typically range from $150 to $500, depending on the lender. That's much lower than refinance closing costs, which can be thousands.
What's the minimum lump-sum payment?
Lenders often require $5,000 to $10,000 as a minimum lump-sum payment for a recast. Check with your lender for their specific requirement.
Can I recast an FHA or VA loan?
FHA and VA loans typically do not allow recasts. Conventional loans usually do, but lender policies vary.
Should I recast or just make extra payments?
If you want a lower monthly payment right away, recast. If you want to pay off the loan faster and save the most interest, keep making the old payment on the new balance instead. This calculator shows both scenarios so you can compare.
Does recasting affect my credit?
No. A recast is not a new loan application, so it doesn't affect your credit score.
Can I share or download a calculation?
Yes. Use Share to copy a link that reopens the calculator with the same inputs, or Download to save the results as a text file.

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