How a mortgage recast works
When you recast a mortgage, you make a large one-time payment toward the principal, and your lender re-amortizes the loan: the new, smaller balance is spread over the months you already had left, at the same interest rate. The result is a permanently lower monthly payment. Unlike refinancing, nothing else about the loan changes — no new rate, no new term, no credit check, no closing costs beyond a small processing fee.
This calculator works out your remaining term from the balance, rate, and current principal-and-interest payment, then recomputes the payment on the reduced balance over that same term. The interest saved is the difference between total remaining interest before and after the recast, net of your lump sum.
Recast vs. refinance vs. extra payments
| Recast | Refinance | Extra payments | |
|---|---|---|---|
| Monthly payment | Goes down | Usually goes down | Stays the same |
| Interest rate | Unchanged | New market rate | Unchanged |
| Payoff date | Unchanged | Usually resets | Moves earlier |
| Typical cost | $150–$500 | 2%–6% of loan | Free |
| Credit check | No | Yes | No |
| Best when… | You want lower payments and your rate is good | Market rates are well below yours | You want to be debt-free sooner |
One nuance worth knowing: for the same lump sum, extra principal payments save more total interest than a recast, because you keep paying the higher payment and retire the loan years earlier. A recast instead converts the lump sum into monthly cash-flow relief. Which is better depends on whether you value a lower payment today or a faster payoff overall.
Who can recast, and what it costs
Recasting is generally available on conventional conforming loans backed by Fannie Mae or Freddie Mac. FHA, VA, and USDA loans typically cannot be recast. Most servicers ask for a minimum lump sum of $5,000–$10,000, charge a processing fee in the $150–$500 range, and take 45–60 days to apply the new payment. Call your servicer and ask for their “loan recast” or “re-amortization” request process.
Frequently asked questions
What is a mortgage recast?
A mortgage recast (or re-amortization) is when your lender recalculates your monthly payment after you make a large lump-sum payment toward principal. Your interest rate and payoff date stay the same — only the monthly payment drops, because the smaller balance is spread over the remaining term.
How much does a mortgage recast cost?
Most lenders charge a one-time processing fee between $150 and $500. Compared to refinancing — which typically costs 2% to 6% of the loan amount in closing costs — a recast is dramatically cheaper.
What is the minimum lump sum required to recast?
Most lenders require a minimum principal payment of $5,000 to $10,000 to qualify for a recast. Some set the minimum as a percentage of your balance instead. Check your servicer’s specific requirements.
Can all mortgages be recast?
No. Government-backed loans — FHA, VA, and USDA — generally cannot be recast. Conventional conforming loans (Fannie Mae and Freddie Mac) usually can. Jumbo loans depend on the lender. If your loan can’t be recast, making extra principal payments achieves similar interest savings without lowering the monthly payment.
Is it better to recast or refinance?
They solve different problems. Recast if you’re happy with your interest rate and simply want a lower payment after a windfall — it’s cheap and doesn’t restart your term. Refinance if current market rates are meaningfully below your rate. A recast never changes your rate.
Does recasting hurt your credit score?
No. A recast is not a new loan, so there is no credit check, no new account, and no impact on your credit score.