Mortgage Recast Calculator: Lower Your Monthly Payment After Lump Sum
See how a lump-sum principal payment plus a recast lowers your monthly mortgage payment — same rate, same payoff date, smaller balance. Compare the before-and-after payment and lifetime interest.
Loan Details
Many lenders require a minimum lump sum of $5,000–$10,000 to recast.
New Monthly Principal & Interest
$1,192
Down from $1,517 — saving $325 per month
Before vs. After Recast
Before
Balance: $280,000
Payment: $1,517
Remaining interest: $175,060
After Lump Sum
Balance: $220,000
Payment: $1,192
Remaining interest: $137,547
You Save
Lump sum applied: $60,000
Monthly: $325
Lifetime interest: $37,513
Recast vs. just making extra payments.
Recasting lowers the monthly payment while keeping the original payoff date. Making an equivalent lump-sum extra payment without recasting keeps the same monthly payment but shortens the loan term (and saves more total interest). Choose recast if you want cash-flow relief; choose extra-payments if you want to pay off the loan sooner.
Worked Example: $400,000 Loan, $50,000 Lump Sum at Year 5
Here is the whole thing with real numbers. A $400,000 30-year fixed mortgage at 6.5% starts at a $2,528 monthly principal-and-interest payment. Five years of payments later the balance has fallen to $374,444 — barely $25,000 of principal retired, because the early years of an amortization schedule are almost all interest. At that point a $50,000 windfall arrives and goes to principal, followed by a recast:
| Before recast | After $50,000 + recast | Change | |
|---|---|---|---|
| Loan balance | $374,444 | $324,444 | −$50,000 |
| Monthly P&I | $2,528 | $2,191 | −$338/mo |
| Interest still to pay | $384,038 | $332,757 | −$51,281 |
| Interest rate | 6.500% | 6.500% | unchanged |
| Payoff date | Year 30 | Year 30 | unchanged |
The payment falls $338 a month — $4,051 a year of freed-up cash flow — and $51,281 of interest disappears, slightly more than the $50,000 that went in. The rate and the payoff date never move. To reproduce this in the calculator above, enter a balance of 374444, a rate of 6.5, a remaining term of 25 years, and a lump sum of 50000; the year-5 balance itself comes straight off the amortization schedule for the original loan.
The same $50,000 at other interest rates
Because a recast keeps your rate, the rate you already have drives the whole result. The higher it is, the more a dollar of principal is worth. Same $400,000 30-year loan, same $50,000 applied at year 5, same 25 years remaining:
| Your rate | Balance at year 5 | Payment before | Payment after | Monthly savings | Interest saved |
|---|---|---|---|---|---|
| 3.50% | $358,788 | $1,796 | $1,546 | $250 | $25,094 |
| 4.25% | $363,231 | $1,968 | $1,697 | $271 | $31,261 |
| 5.50% | $369,842 | $2,271 | $1,964 | $307 | $42,113 |
| 6.50% | $374,444 | $2,528 | $2,191 | $338 | $51,281 |
A borrower sitting on a 3.5% rate from 2021 gets $250 a month back; a 2024 buyer at 6.5% gets $338 from the identical $50,000. The low-rate borrower has the weaker case on pure interest math and the stronger case for recasting anyway — that 3.5% rate is irreplaceable, and a recast is the only way to cut the payment without surrendering it.
What if you skip the recast and just pay the lump sum?
This is the comparison most people miss, and it is not close on interest. Take the same 6.5% loan and apply the same $50,000 at year 5, but don't recast — keep paying $2,528 a month against the smaller balance:
| What you do with the $50,000 | Monthly payment | Loan paid off | Interest saved |
|---|---|---|---|
| Nothing | $2,528 | Year 30 | — |
| Lump sum + recast | $2,191 | Year 30 | $51,281 |
| Lump sum, no recast | $2,528 | Year 23.3 | $152,578 |
Skipping the recast saves three times as much interest — $152,578 versus $51,281 — and retires the loan 6.7 years early, because every dollar you keep overpaying goes straight to principal instead of being spread thin across the original 25 years. Recasting buys cash flow and pays for it in interest. That is a perfectly rational trade if the $338 a month is what you actually need, but go in knowing the price. If the sooner payoff appeals more, run the numbers on extra mortgage payments instead — and note you can do both, applying the lump sum, recasting for safety, and then voluntarily continuing to pay the old $2,528.
How Mortgage Recasting Works
A recast is an administrative request, not a loan application. Start to finish it usually takes 30–60 days, and most of that is waiting for a billing cycle to turn over.
- Confirm your loan qualifies. Call your servicer — not your original loan officer, who may no longer hold the loan — and get three things in writing: that your loan type permits recasting, the minimum lump sum required (commonly $5,000–$10,000), and the recast fee ($200–$500 typical). Do this before you send any money.
- Send the lump sum, marked for principal.This is where recasts go wrong. Unless you explicitly designate the payment as "apply to principal," many servicers will park it as a prepayment of your next several monthly payments, which does nothing to the balance. Use the principal-only option in the servicer's payment portal, or write the instruction on the check and confirm it landed correctly.
- Submit the recast request and pay the fee. Usually a one-page form. No application, no appraisal, no income or asset documentation, and no credit pull — the lender is not underwriting anything, because you are not borrowing anything.
- The lender re-amortizes the loan. They run the standard amortization formula against your new, lower balance across the number of months still left on the original term, at your existing rate. That output is your new payment. Nothing else about the loan is renegotiated.
- The new payment takes effect. Typically on the next billing cycle, sometimes the one after — 30–60 days out. Keep paying the old amount until the servicer confirms the change in writing; underpaying early can trigger a late fee.
- Check the first new statement.Verify the rate is unchanged, the maturity date is unchanged, and the new principal-and-interest figure matches what you were quoted. If you escrow for taxes and insurance, remember your total payment will be higher than the P&I figure — a recast only touches P&I, and your escrow portion is unaffected.
Mortgage Recast vs. Refinance
Both moves can lower a monthly mortgage payment, but they work differently. A refinance replaces your existing loan with a brand-new one. The new loan can have a different rate, a different term, a different lender, and a different program — and it carries the closing costs of any new mortgage, typically $2,000–$6,000 or more. A recast keeps everything about your existing loan and simply re-runs the amortization formula against a smaller balance after you apply a lump sum to principal.
| Recast | Refinance | |
|---|---|---|
| Cost | $200–$500 fee | $2,000–$6,000+ in closing costs |
| Timeline | 30–60 days, mostly waiting for a billing cycle | 30–45 days of active underwriting |
| Credit impact | None — no credit pull, no new account | Hard inquiry, plus a new account replacing an older one |
| Your interest rate | Unchanged | Repriced at today's market rate |
| Payoff date | Unchanged | Resets to the new term (often back to 30 years) |
| Paperwork | A form — no appraisal, income, or asset docs | Full application, appraisal, income and asset docs |
| Lump sum required? | Yes — this is the only lever it has | No |
| Loan types | Most conventional and jumbo; not FHA/VA/USDA | Any loan type |
The decision rule is straightforward: if you have a great rate from a past low-rate window, recast to keep it. If today's rates are meaningfully below your current rate, refinance even though it costs more upfront — the rate cut is worth more than the closing costs within a few years. The refinance calculator gives you that break-even month directly. Watch the payoff-date row while you compare: a refinance that lowers your payment by restarting a 30-year clock at year 5 has added five years of interest, which the monthly number alone won't show you.
If you do land on refinancing, the buy-down question comes with it — paying discount points at closing to push the new rate lower is a separate break-even calculation worth running before you commit, in the mortgage points calculator. Points never enter a recast, since there is no rate to buy down. And the two paths aren't mutually exclusive: refinancing now to capture a lower rate and recasting later when a windfall arrives is a common sequence.
When Recasting Makes Sense
Recasting is built for situations where you suddenly have a big chunk of cash and want it to lower your monthly payment without giving up a low interest rate. Typical triggers:
- Home sale proceeds. You sold your previous home, applied the equity to the new mortgage, and want the new monthly payment to reflect the lower balance.
- Inheritance or windfall. A meaningful lump sum lands in your lap and you want to put it into the house without changing the loan terms you already like.
- Year-end bonus or vesting event. A large bonus, RSU vest, or business sale produces cash that’s earmarked for the mortgage rather than for investing.
- Cash-flow relief during a transition. Job change, new baby, caregiving — situations where the lower monthly payment matters more than the extra interest savings of just paying down faster.
What ties these together: you have the cash, you have a rate you’d hate to lose, and you want the benefit to show up in monthly cash flow rather than in a sooner payoff date.
Which Loans Can Be Recast
Recasting is a feature of conventional mortgages — loans backed by Fannie Mae or Freddie Mac. Most conventional servicers allow it, subject to a lender-specific minimum lump sum (commonly $5,000 to $10,000) and a modest fee. Most jumbo lenders also allow it, though each writes its own rule.
FHA, VA, and USDA loans generally do not allow recasting. If you have one of those and want to lower your monthly payment without a refinance, your options are limited to just making extra principal payments (which shortens the term, not the payment) or pursuing the program-specific streamline refinance. See the FHA loan calculator and VA loan calculator for how those refinance options work.
Before sending in the lump sum, call your servicer and confirm three things in writing: (1) your loan type allows recasting, (2) what the minimum lump sum is, and (3) what the recast fee is. A small amount of friction up front beats the surprise of sending $50,000 to principal and discovering your loan doesn’t qualify.
Frequently Asked Questions
What is a mortgage recast?
A mortgage recast (sometimes called re-amortization) is when your lender recalculates your monthly payment against a smaller loan balance after you apply a lump sum to principal. Everything else about the loan stays exactly the same — same interest rate, same lender, same loan type, same payoff date. Only the monthly principal-and-interest figure changes, because the original amortization formula is re-run against the new, lower balance over the remaining term. On a $400,000 30-year loan at 6.5%, putting $50,000 toward principal at year 5 and recasting drops the payment from $2,528 to $2,191 — $338 a month — and cuts $51,281 of remaining interest. A recast is not a new loan: there is no application, no appraisal, no income documentation, and no credit pull.
How much does it cost to recast a mortgage?
Usually $200–$500. Some lenders charge nothing; a few charge as much as $1,000. Compare that to typical refinance closing costs of $2,000–$6,000+ and the appeal of recasting becomes obvious — you get a smaller monthly payment for an order of magnitude less money. There is no appraisal fee, no origination fee, no title work, and no discount points, because a recast is not a new loan. The one real cost beyond the fee is the lump sum itself, which has to come out of your savings and stops being available for anything else. Ask the lender for the recast fee in writing before you send in the lump sum, and confirm the new payment will be effective on the next billing cycle (usually 30–60 days).
Recast vs. refinance — which is better?
It comes down to one comparison: your current rate versus today's rate. If your existing rate is at or below what's available now, recast — refinancing would mean giving up the better rate to get the lower payment, which is a bad trade. If today's rates are meaningfully below your current rate (roughly 0.75%–1% or more), refinance, because you get both a lower rate and a lower payment, and the rate cut usually outweighs the $2,000–$6,000 in closing costs within a few years. Recasting is also the only option of the two that requires a lump sum: it cannot lower your payment without one, while a refinance can. And a recast leaves your credit untouched, involves no appraisal or income documentation, and costs $200–$500 against 30–45 days of underwriting for a refinance. The two aren't mutually exclusive, either — some borrowers refinance to capture a lower rate, then recast later when a windfall arrives.
What's the minimum lump sum needed to recast a mortgage?
Most lenders require a lump sum of at least $5,000 to $10,000 to qualify for a recast, though some go as low as $1,000 and a few set the floor at $25,000. The lender’s rule isn’t about math — recasting is profitable for them either way — it’s about administrative effort. Ask your servicer for their exact minimum before assuming a smaller windfall qualifies. If you’re below the threshold, you can still apply the money as an extra principal payment without recasting; you just won’t get the lower monthly payment.
Does recasting change my interest rate?
No — that’s the entire point of recasting versus refinancing. A recast keeps your original rate, original term, and original loan type. The lender simply re-runs the amortization formula against the new (lower) balance and gives you a new monthly payment. If you have a 3.5% rate from 2021 that you don’t want to give up, recasting lets you reduce your payment without surrendering the rate. Refinancing into today’s market would replace that rate.
Recasting vs. just paying extra — which is better?
Different goals. Making extra payments without recasting keeps your monthly payment the same but shortens the loan term — you pay off the house earlier and save more total interest. Recasting takes the same lump sum but re-amortizes over the original term, so the payment drops but you finish on the original payoff date. If you want maximum interest savings and don’t need the cash flow relief, just pay extra. If you want lower monthly payments (often to free up cash flow for childcare, a job change, or a side business), recast.
Which loans can be recast?
Most conventional loans backed by Fannie Mae and Freddie Mac allow recasting, subject to the lender’s minimum-lump-sum rule. FHA, VA, and USDA loans generally do NOT allow recasting. Jumbo loans vary — most jumbo lenders permit recasting, but each writes its own rule. If you have a government loan and want to lower your payment, your options are a streamline refinance (FHA/VA/USDA all have them) or just making extra payments to retire the loan faster. Ask your servicer specifically whether your loan type and program allow recasting before you write a check.
What about taxes on a recast?
A recast itself is not a taxable event — you’re applying your own money to your own loan balance. Mortgage interest deductibility doesn’t change: you still deduct the actual interest paid (which will be less going forward, because the balance is smaller). If the lump sum came from a taxable source — selling appreciated stock, withdrawing from a traditional IRA, taking a Roth conversion — the source has tax consequences, but the recast itself doesn’t. Inheritances and home-sale proceeds (within the $250K/$500K capital-gains exclusion) are generally tax-free at the source as well.