Mortgage Recast Calculator

Calculate how a lump-sum payment toward your mortgage principal can lower your monthly payment through recasting, without refinancing.

Recast Details

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Amount to apply to principal

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Enter your mortgage details and lump sum amount to see how recasting can lower your monthly payment.

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Pro Tip

Mortgage recasting is ideal after selling a previous home. Apply the proceeds as a lump sum and recast to lower your monthly payment while keeping your existing favorable rate.

Home Sale Proceeds Calculator →

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Understanding Mortgage Recasting

A mortgage recast is a cost-effective alternative to refinancing that allows you to lower your monthly payment by applying a lump-sum payment to your principal balance. The lender then re-amortizes the remaining loan balance over the remaining term at your existing interest rate.

Unlike refinancing, recasting does not change your interest rate or loan term. This makes it particularly advantageous when you have a low interest rate that you want to preserve. The fees for recasting are minimal, typically $150 to $500, compared to thousands of dollars in refinance closing costs.

Recasting is commonly used by homeowners who receive a large windfall, such as proceeds from selling a previous home, an inheritance, or a substantial bonus. It is also popular with buyers who purchase a new home before selling their old one and want to reduce payments once the previous property sells.

The key benefit of a recast over simply making extra payments is that your required monthly payment is officially reduced. With extra payments alone, your minimum payment stays the same even though you owe less. A recast formally lowers the minimum, improving your monthly cash flow.

Recast Calculation Formula

New Payment After Recast

New M = (P - L) × [r(1+r)n] / [(1+r)n - 1]

Where:

P = Current loan balance

L = Lump-sum payment

r = Monthly interest rate (unchanged)

n = Remaining months (unchanged)

Example

For a $350,000 balance with $50,000 lump sum at 6.5%, 25 years remaining:

  • • New balance: $350,000 - $50,000 = $300,000
  • • New monthly payment: $2,027.64
  • • Original payment: ~$2,365.58
  • • Monthly savings: ~$337.94
  • • Total interest savings: ~$51,382 over remaining term

Frequently Asked Questions

What is a mortgage recast?
A mortgage recast (or re-amortization) is when your lender recalculates your monthly payment based on a reduced loan balance after you make a large lump-sum payment. Your interest rate and loan term remain the same, but your monthly payment decreases because the remaining balance is lower.
How is recasting different from refinancing?
Recasting keeps your existing loan terms (rate, remaining term) and simply lowers your payment based on the reduced balance. Refinancing replaces your entire loan with new terms. Recasting costs $150-$500 in fees compared to thousands in refinance closing costs, and preserves your existing rate.
What is the minimum lump sum for a recast?
Most lenders require a minimum lump-sum payment of $5,000 to $10,000 for a recast, though some may require more. The lender will then re-amortize the remaining balance over the remaining term at the existing interest rate.
Do all lenders offer mortgage recasting?
Not all lenders offer recasting, and government-backed loans (FHA, VA, USDA) typically cannot be recast. Conventional loans from most major lenders are eligible. Contact your loan servicer to confirm availability and their specific requirements.
When does a recast make more sense than extra payments?
A recast is ideal when you receive a large lump sum (inheritance, bonus, home sale proceeds) and want an immediate reduction in monthly payment. Extra payments reduce total interest but do not change your required monthly payment. A recast gives you both benefits.