Mortgage Recast Calculator: See How a Lump Sum Lowers Your Payment
Published 06/05/2026 by
Ante Mazalin
Summary:
A mortgage recast calculator is a tool that shows how much your monthly mortgage payment drops when you put a lump sum toward your principal balance.
The result depends on a few moving parts, each of which you control or can confirm with your servicer.
- Lump-sum payment: The larger the principal reduction, the bigger the monthly payment drop.
- New monthly payment: Your loan is re-amortized over the same remaining term at the same rate, so the payment falls, but the payoff date stays put.
- Recast fee: A flat servicing charge that is far cheaper than refinance closing costs.
- Eligibility: Best for conventional loans in good standing; government-backed loans do not qualify.
If you have come into extra cash and your mortgage payment feels heavier than it should, recasting is one of the few ways to lower it without touching your rate or restarting your loan. The math is simple once you see it laid out.
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How a mortgage recast works
A mortgage recast re-amortizes your existing loan after you make a large lump-sum payment toward the principal. Your interest rate, loan term, and payoff date stay the same, but your monthly payment is recalculated on the new, smaller balance.
Because the loan itself never changes, there is no credit check, no appraisal, and no closing process. You pay a flat servicing fee, typically between $150 and $500, and your new payment takes effect within one or two billing cycles.
The math: what a lump sum actually saves you
The table below shows a recast on a $300,000 balance with a 6.5% fixed rate and 25 years remaining. The current payment is $2,026 per month for principal and interest.
| Lump-sum payment | New monthly payment | Monthly savings | Interest saved over the loan |
|---|---|---|---|
| $10,000 | $1,958 | $68 | $10,256 |
| $25,000 | $1,857 | $169 | $25,641 |
| $50,000 | $1,688 | $338 | $51,281 |
Two patterns jump out. The monthly savings scale in a straight line with the lump sum, and the lifetime interest savings roughly match the size of the payment itself because every dollar of principal stops accruing 6.5% interest for 25 years.
To run your own numbers, divide your proposed lump sum by your current balance. That percentage is almost exactly how much your principal and interest payment will fall.
How to recast your mortgage
The process runs through your loan servicer and usually takes 45 to 60 days from request to new payment.
- Confirm eligibility with your servicer. Conventional loans owned by Fannie Mae or Freddie Mac generally qualify; FHA, VA, and USDA loans do not.
- Ask about the minimum principal reduction. Fannie Mae servicers typically require at least $10,000, which can be paid as one sum or accumulated within a three-month window.
- Submit a written recast request and pay the processing fee.
- Make the lump-sum payment toward principal, clearly marked as a principal-only payment.
- Review the new amortization schedule your servicer sends and confirm the updated payment date.
Recast vs. refinance vs. extra payments
All three strategies use extra money to reduce what your mortgage costs, but they attack different parts of the loan. The right pick depends on whether your priority is a lower payment, a lower rate, or a faster payoff.
| Recast | Refinance | Extra payments | |
|---|---|---|---|
| Monthly payment | Drops | Drops if the rate or term improves | Unchanged |
| Interest rate | Unchanged | Replaced with current market rate | Unchanged |
| Payoff date | Unchanged | Resets with the new loan | Moves earlier |
| Upfront cost | $150 to $500 fee | Typically 2% to 6% of the loan in closing costs | None |
| Credit check | No | Yes | No |
Refinancing wins when market rates sit meaningfully below your current rate, since a recast never touches the rate. Comparing offers from multiple mortgage refinance lenders shows quickly whether the rate gap justifies the closing costs.
Extra payments without a recast save the most interest overall because the shortened term cuts years of interest, but your required payment never gets easier.
Pro Tip: If you are deciding between recasting and investing the lump sum, compare your mortgage rate to a realistic after-tax return. A recast on a 6.5% loan is a guaranteed 6.5% return on every dollar, which is hard to beat without taking on market risk.
Who qualifies for a mortgage recast?
Eligibility comes down to the loan type, the account status, and the size of the principal reduction. Servicers apply these rules before anything else:
- Loan type: Conventional loans backed by Fannie Mae or Freddie Mac are eligible. FHA, VA, and USDA loans cannot be recast because of government pooling rules.
- Payment history: The account must be current, with no active bankruptcy and no recent delinquencies.
- Minimum principal reduction: Commonly $10,000, though some servicers accept $5,000. Multiple payments within a set window can count toward the minimum.
- Loan status: Loans in an interest-only period generally do not qualify, and ARMs cannot have a rate change scheduled within 30 days of the recast.
If your loan is government-backed, the closest alternatives are making principal-only extra payments or refinancing into a conventional loan once you have enough equity.
When recasting makes sense, and when it doesn’t
A recast fits best when you want payment relief, not a faster payoff. Common triggers include a home sale where the proceeds arrive after you bought the next house, an inheritance, a bonus, or vested equity compensation.
It makes less sense in three situations:
- Your rate is well above market. A refinance fixes the rate problem; a recast cannot.
- Your lump sum barely clears the minimum. The monthly drop may be too small to notice.
- Your cash cushion is thin. Principal locked into home equity is hard to get back without borrowing against the house.
Where a lump sum does the most good depends on the rest of your finances, not just the mortgage. Sense AI, the AI assistant in the SuperMoney app, helps you weigh choices like this against the budget and balances you already track there.
Key takeaways
- A recast lowers your monthly payment by re-amortizing your loan after a lump-sum principal payment. Your rate and payoff date stay the same.
- On a $300,000 balance at 6.5%, a $50,000 lump sum cuts the payment by $338 per month and saves about $51,000 in lifetime interest.
- Expect a $150 to $500 servicing fee and a minimum principal reduction of $5,000 to $10,000 depending on the servicer.
- FHA, VA, and USDA loans cannot be recast. Conventional loans in good standing generally can.
- A recast never lowers your interest rate. If rates have dropped since you closed, compare refinance offers first.
FAQ
Does recasting lower my interest rate?
No. A recast keeps your existing rate and term and only recalculates the payment on the smaller balance. Lowering the rate requires a refinance.
How much does a mortgage recast cost?
Most servicers charge a flat fee between $150 and $500. There are no closing costs, appraisal fees, or credit check charges.
What is the minimum lump sum for a recast?
Fannie Mae servicers typically require a $10,000 principal reduction, which can be one payment or several within a three-month window. Some servicers set the floor at $5,000, so confirm the number before sending funds.
Does a mortgage recast affect my credit?
No. There is no credit inquiry and the loan account itself never changes, so nothing new appears on your credit report.
How often can I recast my mortgage?
Most servicers allow repeat recasts as long as you meet the minimum principal reduction and pay the fee each time. Policies vary, so check whether your servicer imposes a waiting period.
Can I recast an FHA or VA loan?
No. FHA, VA, and USDA loans are pooled into government-backed securities that do not permit re-amortization. Principal-only extra payments or a conventional refinance are the alternatives.
A recast only pays off if the loan behind it is competitive in the first place. Comparing current home loan rates from vetted lenders takes a few minutes and tells you whether to recast the mortgage you have or replace it.
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