Mortgage Recast Calculator

See your new monthly payment after a lump-sum principal payment and mortgage recast, the interest you save, and how a recast compares with prepaying and keeping your payment.

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How a Mortgage Recast Works

A recast (also called re-amortization) lets you pay a large sum toward principal and then ask your lender to recalculate the monthly payment on the lower balance. Your interest rate and payoff date stay the same; only the required payment drops. Lenders usually charge a flat administrative fee, commonly $150 to $500, and many require a minimum lump sum such as $5,000 or $10,000. Because the loan is not replaced, there is no new appraisal, credit check or closing costs as there would be with a refinance.

The calculator finds your current balance with the standard remaining-balance formula, subtracts the lump sum, and re-amortizes the result over the months left: new payment = PMT(balance − lump sum, same rate, remaining months).

Worked Example: $50,000 Lump Sum Five Years In

Take a $300,000 loan at 6.5% for 30 years.

The principal and interest payment is $1,896.20.

After 60 payments the balance is $280,832.93.

Paying $50,000 drops it to $230,832.93, and re-amortizing over the remaining 300 months gives a new payment of $1,558.60, a saving of $337.60 a month.

Over the rest of the loan you would pay about $51,281 less interest than with no lump sum, and a $250 fee is recovered in the first month of lower payments.

Recast or Just Prepay?

If you make the same $50,000 payment but keep paying $1,896.20, the loan is gone in 200 months instead of 300, and interest savings grow to about $140,806, nearly three times the recast saving.

Prepaying without a recast is the better deal on paper.

A recast makes sense when you value a lower required payment: after selling a previous home, when income is about to drop, or when you want room in the budget without committing to the higher payment.

You can also recast and then voluntarily keep paying the old amount, which gets you both the flexibility and most of the savings.

Eligibility and Limits

  • Government-backed loans: FHA, VA and USDA loans generally cannot be recast. Conventional loans held or serviced by lenders that offer the option usually can.
  • Minimums and timing: lenders set a minimum lump sum and may require the loan to be current and seasoned for a few months.
  • Prepayment penalties: check your note for a penalty before sending a large payment.
  • Taxes: a smaller balance means less mortgage interest to deduct if you itemize; IRS Publication 936 sets the $750,000 acquisition-debt limit for newer loans.

These are general rules, not guarantees; confirm the fee, minimum and eligibility with your servicer.

Frequently Asked Questions

Common questions about the Mortgage Recast Calculator

The lender takes your balance after the lump sum and re-amortizes it at the same interest rate over the months remaining on the loan. For $230,832.93 at 6.5% over 300 months, the payment is $1,558.60.

Sources & References

What is amortization and how could it affect my loan?

How each fixed payment splits between interest and principal, the basis of the payment, balance and interest formulas used here.
→Source: Consumer Financial Protection Bureau

What is a prepayment penalty?

Check your loan documents for a prepayment penalty before making a large principal payment or recast request.
→Source: Consumer Financial Protection Bureau

Publication 936: Home Mortgage Interest Deduction

Deductible home mortgage interest is limited to the first $750,000 of home acquisition debt ($375,000 married filing separately) for mortgages taken out after December 15, 2017.
→Source: Internal Revenue Service

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