Mortgage Recast Calculator
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.
Recasting vs. Refinancing
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. Refinancing is the right move when current rates are meaningfully below your existing rate.
A recast keeps everything about your existing loan — same lender, same rate, same payoff date, same loan type — and simply re-runs the amortization formula against a smaller balance after you apply a lump sum to principal. Recast fees are usually $200–$500. There’s no appraisal, no credit pull, no income documentation.
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. A break-even comparison usually makes the choice obvious within a few minutes.
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'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.
Is there a fee 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. 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).
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.