What is a mortgage recast?
A mortgage recast (also called re-amortization) is when you make a large payment toward principal and your lender recalculates your monthly payment based on the new, lower balance. Your interest rate stays the same and your loan end date stays the same — only the payment changes. Unlike a refinance, there is no new loan, no credit check, no appraisal and usually just a small administrative fee.
Recasting is especially useful after selling a previous home, receiving an inheritance or bonus, or when you bought a new home before your old one sold and want to bring the payment down once the sale closes.
How the recast payment is calculated
The calculator first finds your original payment with the standard amortization formula:
It then runs your schedule up to the month you make the lump sum, subtracts the lump sum from the balance, and re-applies the same formula to what is left, using the months remaining on the original term:
where k is the number of payments already made. The new payment applies from the following month until the loan is paid off on the original schedule.
Worked example
Take a $300,000 30-year loan at 6.5% with a monthly payment of $1,896.20. After 60 payments the balance is about $280,833. You pay a $50,000 lump sum, leaving roughly $230,833, which is then re-amortized over the remaining 300 months.
The new payment is about $1,558.60 — $337.60 less every month. Over the life of the loan, total interest falls by about $51,300 compared with doing nothing, and the loan still ends in year 30.
Recast vs. prepay without recasting
The same $50,000 could simply be sent as extra principal without asking for a recast. Your payment would stay at $1,896.20, and because you keep paying the higher amount on a smaller balance, the loan would be paid off after about 260 months — nearly 8½ years early — saving around $140,800 in interest. That is much more than the recast saves.
So why recast? Because it trades interest savings for cash-flow flexibility. With a recast, your required payment drops, which lowers your monthly obligation and gives you room in your budget. You can still voluntarily pay the old amount and get most of the prepay-only benefit, but you are no longer locked into it if money gets tight. The comparison table in the calculator shows all three scenarios side by side.
Recast vs. refinance
- Cost: a recast typically costs $150–$500; a refinance usually costs 2–5% of the loan in closing costs.
- Rate: a recast keeps your current rate; a refinance replaces it. If rates have fallen significantly, a refinance may lower your payment more. If your current rate is low, recasting keeps it.
- Qualification: a recast needs no credit check, income verification or appraisal; a refinance requires all three.
- Cash needed: a recast requires a sizable lump sum; a refinance does not (and a cash-out refinance can even give you money).
Which loans can be recast?
Most conventional loans owned by Fannie Mae or Freddie Mac can be recast, subject to the servicer's policy. Government-backed loans — FHA, VA and USDA — generally cannot be recast. Jumbo loans vary by lender. Servicers usually require a minimum lump sum, commonly $5,000 to $10,000 or a percentage of the balance, and that your account is current. Call your servicer to confirm eligibility, minimums and fees before sending money.
When a recast makes sense
- You want a lower required payment but do not want to lose a low interest rate.
- You bought a new home before selling the old one and will apply the sale proceeds.
- Your income is becoming less predictable — retirement, self-employment or a new baby — and a lower fixed obligation brings peace of mind.
- You want to reduce your debt-to-income ratio before applying for another loan.
When it may not
If your only goal is to pay the least interest possible, prepaying without a recast (and continuing the original payment) saves more. If you might need the cash later, remember that money paid into the house is illiquid; a home equity line is the only way to get it back, and that means borrowing at a new rate. And if you have high-interest debt, paying that off first is almost always better.
How to request a recast
Call or message your servicer and ask whether your loan is eligible, what the minimum lump sum is, and what fee applies. Send the lump sum as a principal-only payment, then submit the recast request (some servicers want both together). Processing usually takes 30–60 days, and your new payment begins on the next statement after the recast is complete. Keep making your current payment until you see the new amount confirmed in writing.
Limitations
Figures cover principal and interest only and assume a fixed rate. The recast fee is added to total paid but not to interest. Your servicer may set the new payment from the first full month after processing, which can shift results slightly.
Frequently asked questions
How much will my payment drop after a recast?
It depends on the size of the lump sum and how much of the term remains. As a rule of thumb at 6.5% with 25 years left, every $10,000 lowers the payment by about $67 per month.
Does a recast change my interest rate or term?
No. The rate and maturity date stay the same; only the monthly payment is recalculated.
Can FHA or VA loans be recast?
Generally no. Recasting is mostly available on conventional loans. Check with your servicer.
How much does a mortgage recast cost?
Typically a flat administrative fee of $150 to $500, far less than refinancing.
Is recasting better than paying extra principal?
Prepaying without recasting saves more interest if you keep paying the original amount. Recasting lowers your required payment, giving you more monthly flexibility.
What is the minimum lump sum for a recast?
Many servicers require at least $5,000 to $10,000, or a set percentage of the balance.
Sources
- Consumer Financial Protection Bureau: Mortgages
- Consumer Financial Protection Bureau: What is a prepayment penalty?
- Fannie Mae: Single-family mortgage products
Last reviewed: Oct 17, 2026. See how we calculate and test. Calculations use the standard fixed-rate amortization formula with interest rounded to the cent each period.