Financing
Mortgage Recast Calculator
See your new payment and the interest you save after a lump-sum principal payment.
Before and after the recast
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Your rate and remaining term stay the same in a recast. Only the balance and the payment change. Escrow for taxes and insurance is not included above.
How this works
A mortgage recast, sometimes called a re-amortization, lets you put a lump sum toward your principal and then have the lender recalculate your monthly payment on the smaller balance. The key detail is what stays the same: your interest rate and your remaining term do not change. Only the balance shrinks, so the same payoff date is now spread over less money and the required payment drops. That makes a recast different from a refinance. A refinance replaces the loan entirely, which means a new rate, new closing costs, and usually a new 30 year clock. A recast keeps your existing loan intact, so a low legacy rate stays untouched and the paperwork is minimal. Most lenders charge a flat fee of roughly $150 to $500 to process one, far less than refinance closing costs. It is also different from simply making an extra principal payment. If you pay a lump sum without recasting, your monthly payment stays exactly the same and the loan just finishes earlier. A recast redirects that same benefit into lower monthly cash outflow instead of a shorter term. For a landlord, that is often the better trade, because a lower payment lifts monthly cash flow on the property immediately and improves your debt service coverage ratio for future borrowing. The trade-off is liquidity. Money used to recast is locked in the property until you sell or refinance, and you still pay interest on the remaining balance for the full remaining term. Compare the monthly saving against what that cash could earn elsewhere, and check three things with your lender before you commit: whether your loan type is eligible (most conventional loans are, most FHA, VA and USDA loans are not), the minimum lump sum they require, and the exact fee.
Weighing this against pulling cash out instead? Try the Cash-Out Refinance Calculator, or see the effect on the whole deal in the Rental Property Calculator.
Worked example
Say you owe $320,000 at 6.5% with 300 months (25 years) left, and you put $50,000 toward the principal and recast.
Your payment before the recast is about $2,160.66 a month in principal and interest. The lump sum drops the balance to $270,000, and because the rate and the 300 remaining months are unchanged, the payment is recalculated to about $1,823.06.
That is a saving of about $337.60 every month, or roughly $4,051 a year of extra cash flow. Over the full remaining 300 months you pay about $51,281 less interest than you would have. With a typical $300 recast fee, you recover the fee in well under one month of savings.
Compare that with paying the same $50,000 in without recasting: the payment would stay at $2,160.66 and the loan would simply end early instead. Same money, different shape of benefit.
Frequently asked questions
Does a mortgage recast lower my interest rate?
No. A recast keeps your existing interest rate and your existing payoff date. It only recalculates the monthly payment on the smaller balance after your lump sum. If you want a lower rate you need a refinance, which replaces the loan and carries closing costs.
How much does a mortgage recast cost?
Most lenders charge a flat processing fee of roughly $150 to $500. There is no appraisal, no new title work, and no origination fee, which is why a recast is far cheaper than a refinance. Ask your servicer for the exact figure and for their minimum lump sum, which is often around $5,000 to $10,000.
Is recasting better than just paying extra principal?
It depends on what you want. Extra principal payments without a recast keep your payment the same and shorten the loan. A recast keeps the same payoff date but lowers the payment, which frees up monthly cash. Investors usually prefer the recast because monthly cash flow improves right away and helps with future lending ratios.
Which loans can be recast?
Most conventional loans held by Fannie Mae or Freddie Mac allow recasting. FHA, VA and USDA loans generally do not. Jumbo loans vary by lender. Confirm eligibility with your servicer before you send the lump sum, because some lenders will apply it as a straight principal payment instead if you do not request the recast explicitly.
Will a recast hurt my credit score?
No. A recast is not a new loan and there is no hard credit inquiry, so it has no direct effect on your score. Your balance falls, which can help utilization measures indirectly, and your payment history continues on the same account.
More Financing tools
- Seller Financing Calculator Work out the seller note, monthly payment, and the balloon balance on an owner-financed deal.
- DSCR Loan Calculator Check debt service coverage ratio and find the max loan a lender will approve.
- Cash-Out Refinance Calculator See how much equity you can pull from your property and what your new payment will be.