What a mortgage recast is
A mortgage recast (sometimes called re-amortization) lets you pay a large lump sum toward your principal and then have your lender recalculate the monthly payment over the same remaining term at the same interest rate. Your loan does not change in any other way: there is no new application, no credit check, no appraisal and usually only a small administrative fee.
Recasting is popular with people who buy a new home before selling the old one, receive an inheritance or bonus, or simply want a lower required payment for more breathing room each month.
How this calculator works
It uses the standard amortization formula twice: once for your current balance and once for the balance after the lump sum, both over the time you have left. The difference is your monthly saving. It then compares the total interest you would pay in each case and divides the recast fee by the monthly saving to show how quickly the fee pays for itself.
Finally, it shows the alternative: paying the same lump sum but keeping your old payment. That pays the loan off early and usually saves even more interest, but it does not lower the amount you are required to pay each month.
The formula
The payment shown is principal and interest only. Property tax, homeowners insurance and mortgage insurance held in escrow are not affected by a recast, although a lower balance can help you remove PMI sooner on a conventional loan.
Worked example
You owe $250,000 at 6.5% with 25 years left. Your principal-and-interest payment is about $1,688 a month.
You pay $50,000 and recast. The new balance of $200,000 over the same 25 years gives a payment of about $1,350, saving roughly $338 a month and about $51,000 in interest over the remaining term. A $250 fee is earned back in the first month.
If you paid the $50,000 but kept paying $1,688, the loan would be gone in just under 16 years and total interest would fall to roughly $121,000, compared with about $205,000 after a recast.
Recast, refinance or prepay?
- Recast when you like your current rate, have a lump sum and want a lower required payment without closing costs.
- Refinance when market rates are meaningfully lower than yours, or you need to change the term or loan type. Expect closing costs, often 2–5% of the loan.
- Prepay without recasting when your goal is to be debt-free sooner and pay the least interest, and you do not need the lower payment.
Frequently asked questions
Can every mortgage be recast?
No. Many conventional loans can be recast, but government-backed FHA, VA and USDA loans generally cannot. Lenders also set their own rules, so check with your loan servicer before you send any money.
How much do I need to pay to recast?
Lenders usually set a minimum lump sum, often somewhere around $5,000 to $10,000 or a percentage of the balance. Your servicer can tell you the exact minimum and fee.
Does a recast lower my interest rate?
No. Your rate and the remaining term stay the same. Only the balance and therefore the payment change. To get a lower rate you would need to refinance.
Does recasting affect my credit score?
A recast is not a new loan and usually involves no credit check, so it typically has no direct effect on your credit score.
Is it better to invest the lump sum instead?
It depends on your mortgage rate, your tax situation, your other debts and how much risk you are comfortable with. Paying down a mortgage gives a guaranteed return equal to its interest rate, while investing may earn more or less. Keep an emergency fund before putting a large sum into your house.
Last reviewed November 2026. Spotted an error? Tell us.