Mortgage recast calculator
Enter your loan and lump sum, get the new payment.
What is a mortgage recast?
Fannie Mae describes it as recalculating the monthly payment over the remaining loan term after the borrower pays a substantial amount of principal. The rate and the payoff date stay the same; the payment drops.
Example
$250,000 left at 6% with 25 years (300 payments) to go costs $1,610.75 a month. Pay $50,000 down and recast: the payment becomes $1,288.60 — $322.15 less — and you save about $46,645 in interest over the rest of the loan.
How is it different from refinancing?
A recast keeps your loan, rate and term; only the balance and payment change. Refinancing replaces the loan with a new one, possibly at a different rate and term, usually with closing costs.
Recast or just prepay?
If you prepay without recasting, the payment stays the same and the loan ends sooner, which saves more interest. A recast lowers the monthly payment instead.
Can every loan be recast?
No — it is up to the loan and the servicer. Ask your servicer whether it offers recasting, the minimum lump sum and any fee.
Does a recast change my interest rate or term?
No. The rate and the remaining term stay as they were; only the balance and the monthly payment are recalculated. Your next payment is lower, and the loan still ends on the same date.
Should I recast or keep the payment and finish sooner?
It depends on the goal. Keeping the payment and paying the lump sum as extra principal ends the loan sooner and saves more interest; recasting frees monthly cash flow. In the example below, the lump sum saves $183,357 of interest if the payment stays the same, against $67,440 with a recast.
Is there a fee, and do I need a minimum lump sum?
Servicers set their own rules. Some charge a fee or set a minimum lump sum, and some do not offer recasting at all, so ask your servicer before sending the money and confirm that the recast is processed rather than just applied as a regular extra payment.
How the new payment is found
The calculator subtracts the lump sum from the current balance and runs the ordinary loan-payment formula on what is left, using the same rate and the same number of months remaining. The interest figure compares the payments you would have made with the new payments over the rest of the term, minus the lump sum itself, so it shows the interest you avoid by paying down the balance. The calculation assumes a fixed rate; for an adjustable-rate loan the payment will change again when the rate resets.
Worked example: $60,000 toward a $300,000 balance
A balance of $300,000 at 6.5% with 324 payments (27 years) left costs $1,966.66 a month. A lump sum of $60,000 leaves $240,000, and the same formula over 324 months gives $1,573.33, which is $393.33 a month lower. Over the remaining term you avoid about $67,440 of interest.
If you instead put the $60,000 toward principal and kept paying $1,966.66, the loan would end after about 201 payments (16 years 9 months) instead of 324, and total interest on the remaining balance would be about $153,843 instead of $269,760 with the recast.
Common mistakes
Assuming a recast reduces the interest rate is the most frequent error; it does not, so if the rate is the problem a refinance is the tool to compare. Another is sending extra money without asking for a recast: the servicer then applies it as principal, the payment stays unchanged, and the loan simply ends earlier. A third is entering the original loan term instead of the months remaining, which gives a payment for a loan that no longer exists. Finally, check that the lump sum does not leave you short of an emergency reserve, since money put into a home cannot easily be taken back out.
Sources: Fannie Mae definition of a recast (recalculating the payment over the remaining term after a principal reduction); loan payment formula, the same as the mortgage calculator. Related: mortgage calculator, refinance calculator, loan payoff calculator, amortization calculator.
Estimates for planning only — not financial or tax advice. Your lender, plan or tax professional decides. How we check our calculators.