Mortgage Recast Calculator
Calculate your new monthly mortgage payment after making a lump-sum principal payment and recasting your loan. See how much you save each month, total interest saved, and your updated payoff timeline — all without refinancing.
How Mortgage Recasting Works
A mortgage recast (also called re-amortization) is when you make a large lump-sum payment toward your principal balance and your lender re-amortizes the loan over the remaining term. The result is a lower monthly payment at the same interest rate, without the closing costs or credit checks of a refinance. Most lenders charge a small recast fee (typically $150 to $500) and require a minimum lump-sum payment, often $5,000 or $10,000.
This calculator takes your current loan balance, interest rate, remaining term, and lump-sum payment to compute your new monthly payment and lifetime savings. The formula uses standard fixed-rate amortization: the new payment is calculated against the reduced balance over the original remaining term.
Recast vs Refinance vs Extra Payments
Recasting is ideal when you already have a low interest rate and simply want a lower monthly payment after receiving a windfall like an inheritance, bonus, or home sale proceeds. Refinancing replaces your loan entirely and only makes sense when rates have dropped significantly. Making extra principal payments without recasting shortens your loan term but keeps your monthly payment the same.
For example, on a $300,000 mortgage at 6.5% with 25 years remaining, a $50,000 recast lump sum drops the monthly payment from about $2,025 to around $1,687 — saving $338 per month and tens of thousands in interest. The same $50,000 as an extra payment without recasting keeps payments at $2,025 but shortens the term by roughly 5 years.
When a Recast Makes Sense
Recasting works best if you have a large sum to deploy, a competitive existing rate, and want cash flow relief rather than a faster payoff. It preserves your loan terms, credit score is unaffected, and there's no appraisal. Not all loans qualify — FHA, VA, and most USDA loans cannot be recast. Conventional conforming loans through Fannie Mae and Freddie Mac typically allow it, but always check with your servicer first.
Running the Numbers Before You Commit
Before making a recast, run three scenarios in this calculator: lump sums at 5%, 10%, and 20% of your balance. Compare the monthly savings against the opportunity cost of investing that cash elsewhere. A 6.5% mortgage rate is effectively a 6.5% guaranteed after-tax return on the recast amount. If you expect higher returns investing, extra payments may not be optimal. But for risk-averse borrowers or anyone seeking monthly cash flow, a recast delivers immediate, guaranteed relief.
Mortgage Recast Calculator — Which Servicers Allow It in 2026
Before you use this mortgage recast calculator to plan a lump-sum payment, confirm your servicer actually allows recasting. Per the Fannie Mae Selling Guide 2026, conventional conforming loans sold to Fannie Mae or Freddie Mac may be recast at the servicer's discretion — most major servicers (Chase, Wells Fargo, Bank of America, Rocket Mortgage, PennyMac, Mr. Cooper, US Bank) accept recasts with a $150-$500 fee and a $5,000-$10,000 minimum lump sum. Federally-insured loans have a stricter rule: HUD Handbook 4000.1 confirms FHA loans cannot be recast, VA loans cannot be recast per VA Lenders Handbook Chapter 3, and USDA guaranteed loans cannot either. If your loan is one of these, you must instead apply extra payments as principal-only (which shortens the term but keeps monthly payment the same) or pursue an FHA Streamline / VA IRRRL refinance if rates justify. Call your servicer with your loan number and ask specifically: "Do you offer principal reduction with re-amortization on this loan, and what is the fee and minimum?" — those exact words trigger the correct department. Updated 2026-07-28.
Recast vs Invest the Lump Sum: 2026 Break-Even Math
The core recast decision comes down to a single comparison: your mortgage rate versus your expected after-tax investment return. A recast is a guaranteed savings equal to your mortgage rate (5% mortgage rate = 5% guaranteed return on the recast amount). Investing the same lump sum is a variable return with market risk. Three break-even zones for 2026: (1) Mortgage rate 3-5% — investing usually wins. Even a conservative 60/40 portfolio historically returns 6-8% before tax (5-7% after tax at LTCG rates). Under IRS Publication 936, mortgage interest deductibility further reduces your effective mortgage rate — a 4% mortgage in the 24% federal bracket is really a 3.04% effective rate if you itemize (only ~10% of taxpayers itemize post-TCJA, so most people get the full 4%). (2) Mortgage rate 5-7% — near break-even. Recast is safer, investing may pay slightly more but with sequence risk. (3) Mortgage rate 7%+ — recast usually wins. Very few after-tax investment strategies clear a guaranteed 7% return without significant risk. Special cases where recast still wins even at low rates: (a) You want cash-flow relief immediately (recast lowers monthly payment; investing does not), (b) you have no emergency fund yet (invest that first, not the recast), (c) you're 3-7 years from retirement (recast reduces sequence-of-returns risk), (d) you're a high earner in a HCOL area facing SALT cap issues (recast reduces P&I; investment income adds to AGI). Run this calculator alongside your investment return projection to compare — the "Total Interest Saved" figure is the guaranteed dollars you're comparing against. Updated 2026-07-28.
Frequently Asked Questions
What is a mortgage recast?
A recast is when you make a large lump-sum principal payment and your lender re-amortizes the loan over the remaining term, lowering your monthly payment at the same interest rate. No refinance, no closing costs, no credit check.
How much does a mortgage recast cost?
Most lenders charge a recast fee between $150 and $500. This is far cheaper than refinancing, which can cost 2-5% of the loan balance in closing costs. Some lenders offer one free recast over the life of the loan.
What loans can be recast?
Most conventional conforming mortgages (Fannie Mae and Freddie Mac) allow recasting. FHA, VA, and USDA loans generally do not. Jumbo loans and portfolio loans vary by lender. Always confirm with your servicer before sending a lump sum.
Recast vs refinance — which saves more?
If your current rate is already low, recasting wins because there are no closing costs. If rates have dropped 0.75%+ below your rate, refinancing usually wins despite closing costs. Refinancing also lets you change the term; recasting keeps your original term.
Does recasting affect my credit score?
No. A recast does not involve a credit pull, new loan, or change in reported terms to credit bureaus. Your loan continues as-is, just with a lower balance and payment. This makes it ideal for borrowers with credit concerns.
What is the minimum lump sum for a recast?
Most lenders require $5,000 or $10,000 minimum, though some require 10% of the original loan amount. Check your loan agreement or contact your servicer for specific requirements before planning a recast.
Which major mortgage servicers offer recasting?
Most major US servicers offer recasting on conventional conforming loans: Chase, Wells Fargo, Bank of America, Rocket Mortgage, PennyMac, Mr. Cooper, and US Bank all accept recasts with fees ranging $150-$500 and minimum lump sums of $5,000-$10,000. Ask specifically for "principal reduction with re-amortization" when you call — that phrase routes you to the right department instead of a generic payoff representative. FHA, VA, and USDA loans do not permit recasting under federal program rules regardless of servicer.
How long does a mortgage recast take to process?
From lump-sum receipt to first reduced monthly payment, most servicers complete a recast in 30-60 days. The servicer must post the payment, apply the recast fee, run the re-amortization, generate new payment coupons, and send a modification statement. Time your payment for the start of a month and expect the new lower payment to begin either the following month or the month after. If your loan is on autopay, verify the servicer updates the amount — it does not always sync automatically.
Should I recast my mortgage or invest the lump sum instead?
Depends on your mortgage rate versus your expected after-tax investment return. Below 5% mortgage rate, investing typically wins historically (60/40 portfolios return 6-8% before tax). Above 7%, recasting almost always wins because it is a guaranteed after-tax return equal to your rate. Between 5-7% it is near break-even — recast if you value cash-flow relief or are approaching retirement (reduces sequence-of-returns risk); invest if you have long time horizon and stable income. Also invest first if you have no emergency fund yet — a recast locks the money into the house.
Is the lump-sum recast payment tax deductible?
No. Neither the lump-sum payment nor the recast fee is tax deductible. Under IRS Publication 936, only your MORTGAGE INTEREST is deductible, and recasting reduces future interest — so it actually shrinks your future mortgage interest deduction if you itemize. In practice this rarely matters: only about 10% of taxpayers itemize post-TCJA/OBBB, and the interest savings from the recast far exceed the lost deduction for the ~90% who take the standard deduction. High earners with $10K+ SALT cap already maxed usually still benefit from recasting.