Mortgage Recast Calculator: New Payment After a Lump Sum

Enter your loan and the lump sum you plan to pay. The calculator shows your new monthly payment after a recast, the interest you save, and how that compares with paying the same lump sum and keeping your current payment.

What a mortgage recast is

A recast, also called re-amortization, is a request to your loan servicer after you pay a large amount toward principal. The servicer recalculates your monthly payment from the new, lower balance. Your interest rate stays the same and so does your payoff date. Only the payment changes.

Without a recast, an extra principal payment does not lower your monthly bill. You keep paying the same amount, more of each payment goes to principal, and the loan ends early. A recast trades that early payoff for a lower required payment.

How the calculator works

The new payment is the standard amortization formula applied to the reduced balance:

$M = \frac{(B - L) \cdot r}{1 - {(1 + r)}^{- n}}$

B is your current principal balance and L is the lump sum.
r is the monthly rate: the annual rate divided by 12. A 6% loan has r = 0.005.
n is the number of monthly payments left on the loan.

This matches how Fannie Mae describes the process for loans it owns: the servicer re-amortizes the current unpaid balance at the current interest rate over the remaining term. The calculator then builds a full month-by-month schedule for three paths, rounding interest to the cent each month as a servicer posts it:

Keep as is: no lump sum, current payment, current payoff date.
Lump sum + recast: balance reduced, payment re-amortized over the same remaining months.
Lump sum, no recast: balance reduced, payment unchanged. The number of payments left is $n = - \frac{\ln (1 - r B′ / P)}{\ln (1 + r)}$ , where B′ is the reduced balance and P is your current payment.

Payments here are principal and interest only. Property tax, homeowners insurance, and mortgage insurance in your escrow payment are not affected by a recast.

Worked example

You owe $250,000 at 6% with 25 years (300 payments) left, so your principal and interest payment is $1,610.75. You put $50,000 toward principal and pay a $250 recast fee.

	Keep as is	Lump sum + recast	Lump sum, no recast
Monthly P&I	$1,610.75	$1,288.60	$1,610.75
Payoff	25 yr	25 yr	16 yr 3 mo
Remaining interest	$233,227	$186,582	$113,192
Interest saved	—	$46,645	$120,035

The recast lowers the payment by $322.15 a month. Skipping the recast and keeping the $1,610.75 payment finishes 8 years and 9 months sooner and costs $73,640 less in interest and fees. That gap is what the lower payment costs you over the life of the loan. Whether it is worth it depends on what the freed-up $322 a month does for you.

The size of the lump sum matters. With the same loan, a $10,000 lump sum lowers the payment by only $64.43, which makes a $250 fee take about four months of savings to cover.

Who can recast

Conventional loans: most loans owned by Fannie Mae or Freddie Mac and many jumbo loans can be recast if the servicer offers it. Ask the servicer for its written recast policy.
FHA, VA, and USDA loans: generally not eligible. Extra principal payments still shorten these loans, but the payment does not drop.
Common conditions: the loan must be current, the lump sum must meet the servicer's minimum (often $5,000 to $10,000), and some servicers require the loan to be a few months old. Loans in an interest-only period usually do not qualify.

When a recast makes sense

You received a large sum, such as a home sale, bonus, or inheritance, and want a lower required payment.
You bought a new home before selling the old one and want to pay down the new loan once the old one sells.
Current rates are higher than yours, so refinancing would raise your rate.
You value cash-flow flexibility: you can still pay extra each month, but you are no longer required to.

If your goal is to pay as little interest as possible, keeping your payment after the lump sum does that better and costs no fee. If you are weighing the lump sum against investing it, compare the two with the pay off mortgage or invest calculator (coming soon).

Frequently asked questions

How is a recast payment calculated?

The servicer takes your balance after the lump sum and re-amortizes it at your existing interest rate over the months left on the loan. The rate and the payoff date stay the same; only the payment drops.

Does recasting save money?

Yes, because the lump sum cuts the balance that interest is charged on. But the lump sum does that whether or not you recast. Recasting itself only lowers the required payment, and it saves less interest than keeping your old payment after the same lump sum.

What is the minimum lump sum to recast a mortgage?

It is set by your servicer. Many ask for at least $5,000 to $10,000, and some allow several payments within a short window to count toward the minimum.

How much does a mortgage recast cost?

Servicers commonly charge a flat fee of about $150 to $500. There is no appraisal, credit check, or closing cost as there is with a refinance.

Can I recast an FHA, VA, or USDA loan?

Generally no. Government-backed loans are usually not eligible for a recast. You can still make extra principal payments on them; the payment just stays the same and the loan ends sooner.

Is it better to recast or refinance?

Recasting keeps your rate and costs a small fee. Refinancing can change the rate and term but brings closing costs. If current rates are well below yours, a refinance may save more; if not, a recast is the cheaper way to lower the payment.

Sources and assumptions

Fannie Mae Servicing Guide, C-1.2-01: Processing Additional Principal Payments, on re-amortizing the unpaid balance at the current rate over the remaining term.
Fees, minimums, and eligibility vary by servicer. Figures here are common ranges, not a quote.
The calculator assumes a fixed rate, on-time payments, and a lump sum applied before the next payment.

This calculator is an educational estimate, not financial or lending advice. Confirm your balance, remaining term, fee, and eligibility with your loan servicer before sending a payment.