Mortgage Recast Savings Calculator
See how a lump-sum principal payment plus mortgage recast reduces your monthly payment without refinancing.
What Is Mortgage Recasting?
Mortgage recasting (re-amortization) is the lender's process of recalculating your monthly payment based on a reduced principal balance, while keeping the same interest rate and remaining term. You pay a lump sum toward principal (typically $5,000-$10,000 minimum), pay a small recast fee ($150-$500), and the lender re-amortizes the loan — your monthly payment drops permanently.
Unlike refinancing, recasting doesn't require credit check, appraisal, or new closing costs. The interest rate stays the same. The loan term stays the same. Only the monthly payment changes. Not all loan types allow recasting — conventional conforming usually does; FHA, VA, and USDA generally do not. Always confirm with your servicer. Source: Consumer Financial Protection Bureau. Last updated: May 2026.
Recast vs Refinance vs Prepayment
| Strategy | Changes Rate | Changes Payment | Changes Term | Closing Costs |
|---|---|---|---|---|
| Recast | No | Yes (lower) | No | $150-$500 |
| Refinance | Yes | Yes | Can change | $3,000-$8,000 |
| Prepayment (extra principal) | No | No (you choose to keep paying) | Effectively shorter | $0 |
When Recast Beats Refinance
Recast wins when (1) your current rate is already great (locked from 2020-2021 sub-3% rates), (2) you've come into a windfall (inheritance, business sale, bonus) and want to redirect cash flow, and (3) you don't want to pay refi closing costs or face credit/income re-verification.
Refinance wins when current rates are 0.75%+ below your existing rate AND you'll stay long enough to recoup closing costs. As of May 2026, with rates near 6.85% on 30-year, most homeowners with 2020-2021 sub-4% rates should NOT refinance — recast is the better tool for redirecting a lump sum.
Recast vs Just Prepaying
If you apply the lump sum as extra principal WITHOUT recasting, your required monthly payment stays the same — but the loan pays off years early. If you recast, your required monthly payment drops, but the term stays the same. Choose based on goal: cash flow flexibility (recast) vs total interest savings (prepayment). Mathematically, prepayment without recast saves more total interest over the life of the loan.
Frequently Asked Questions
How much principal do I need to recast a mortgage?
Most servicers require a minimum lump sum of $5,000-$10,000 to qualify for recasting. Some require the new payment to be at least 5-10% lower than the current payment. Smaller amounts can be applied as extra principal but won't trigger a recast.
Does mortgage recast change my interest rate?
No. Recasting keeps your original interest rate. Only the principal balance changes, so the monthly payment drops. This is the main reason recasting beats refinancing when current rates are higher than your existing rate.
Can I recast an FHA, VA, or USDA loan?
Generally no. FHA, VA, and USDA loans typically do not allow mortgage recasting. To reduce monthly payments on these, you must either refinance to a conventional loan or to a streamlined FHA/VA/USDA refinance. Always confirm with your servicer.
How long does a mortgage recast take?
Typically 30-60 days from lump-sum payment to the new payment taking effect. The servicer processes the principal payment, recalculates the amortization schedule, and sends you a new disclosure. You continue paying the old amount until the new payment kicks in.
Does recasting hurt my credit score?
No. Recasting is not reported to credit bureaus as a new loan or modification. There's no hard inquiry, no new account, no change in credit history. It's an internal recalculation by your servicer.
Is mortgage recast tax-deductible?
The recast fee itself is not deductible. The lump-sum principal payment is not deductible (no principal payment ever is). Going forward, your monthly mortgage interest is lower \u2014 which means slightly lower interest deduction if you itemize. Source: IRS Publication 936.