Freedom Mortgage Mortgage Recast Calculator

A mortgage recast (also called mortgage re-amortization) is when you make a large, one-time principal payment toward your existing mortgage balance, and your lender recalculates your monthly payment based on the new, lower balance. Your original interest rate and remaining loan term stay the same.

You are resetting the amortization math without replacing your loan. Your 30-year or 15-year term and interest rate generally stay the same. Because the principal balance is smaller, your required monthly payment may drop permanently after the lender approves the recast. If you are considering a refinance instead, compare both options side by side first.

Your monthly mortgage payment gets calculated by amortizing your loan balance over your remaining term at your fixed interest rate. When you shrink the balance with a lump sum, the same formula spits out a lower monthly payment. The terms did not change. The principal input to the amortization formula did.

General agency reference: Fannie Mae Selling Guide. It describes principal curtailment and re-amortization, but it does not establish the policy of every servicer.

The process has four steps:

1. Verify eligibility. Contact your mortgage servicer and confirm your loan qualifies. Conventional loans owned by Fannie Mae or Freddie Mac are generally eligible. FHA, VA, and USDA loans are not.
2. Make a lump-sum principal payment. Lenders require a minimum principal reduction, commonly $5,000 to $10,000 or about 10% of the remaining balance. The payment must be designated as a principal reduction, not an early monthly payment.
3. Submit the recast request. Most lenders require a signed recast agreement form. Processing usually takes 2 to 6 weeks once your lump-sum payment clears, though some servicers take up to 90 days. The lender charges a one-time administrative fee; most charge $150 to $250, though some charge up to $500 and a few charge none.
4. Receive your new amortization schedule. Once processed, your lender sends a revised payment schedule showing your new, permanently lower monthly payment for the rest of your original term.

Here are the situations where recasting is worth considering:

• You have a low rate you want to keep. If you locked in at 3% or 4% and current rates are above 6%, refinancing would push your rate higher. A recast lowers your payment but leaves your rate alone.
• You have a lump sum to deploy. An inheritance, a bonus at work, proceeds from selling a second property, or savings you have built up. Putting that cash toward your principal and recasting immediately frees up monthly cash flow.
• You want a lower required payment. A recast drops your mandatory monthly payment. You can still pay extra whenever you want, but your minimum is permanently lower. That flexibility helps if your income changes or other expenses come up.
• You plan to stay in the home. The interest you save compounds over the remaining years of the loan. The longer you hold the mortgage, the more those savings add up.
• You are comparing it to other uses for the cash. Paying down a 6.5% mortgage can be viewed as an approximately 6.5% interest-cost reduction before considering taxes, liquidity, and other tradeoffs. Compare that benefit with the alternatives available to you.

Mortgage recasting is available on conventional conforming loans backed by Fannie Mae or Freddie Mac. This covers both 30-year and 15-year fixed-rate mortgages, along with adjustable-rate mortgages (ARMs). Most major lenders and servicers offer recasting as a standard service for qualifying conventional loans. That includes Chase, Wells Fargo, Bank of America, U.S. Bank, PennyMac, and Navy Federal Credit Union.

Government-backed loans are not eligible for recasting. This means FHA loans, VA loans, and USDA loans. These loan types are pooled under federal programs that do not allow re-amortization. If you have an FHA loan with mortgage insurance (MIP), the path to restructuring your payment is a refinance into a conventional loan once you hit 20% equity.

Jumbo loans (those above conforming loan limits) depend on the lender. Some portfolio lenders allow recasting on jumbo loans they hold on their own books. Others do not. Check with your servicer.

Enter your current loan balance, interest rate, remaining term in months, and the lump sum you are considering. The calculator updates in real time and shows:

• Your new monthly payment after the recast
• Total lifetime interest saved by reducing your principal now
• A side-by-side amortization chart showing your original vs. recast balance over time
• A comparison table with month-by-month details

All calculations run locally in your browser. No mortgage data gets sent to a server. Adjust the sliders to test different lump sum amounts and see how each one changes your monthly payment and total interest.

This calculator uses the standard fixed-rate mortgage amortization formula: M = P[r(1+r)^n]/[(1+r)^n - 1], where P is your loan balance, r is the monthly interest rate (annual rate divided by 12), and n is the remaining number of months.

For the recast scenario, the same formula is applied to the reduced principal balance after subtracting your lump sum. The difference between the original payment and the recast payment is your monthly savings. The total interest savings is the difference in cumulative interest over the remaining term. All calculations run in your browser. No data leaves your device.