Mortgage Recast Calculator

Mortgage recasting is when you make a large lump-sum payment toward your principal, and your lender recalculates your monthly payments based on the new, lower balance while keeping your interest rate and loan term the same. Unlike refinancing, you don't replace your loan with a new one, avoiding closing costs (2-6% of loan amount) and credit checks. Recasting typically costs $150-$500 in administrative fees, much less than refinancing. However, refinancing lets you change your interest rate and loan term, while recasting preserves your existing rate.

Most lenders require a minimum lump-sum payment of $5,000 to $10,000 for recasting, though some may have higher requirements. The payment must be substantial enough to meaningfully reduce your monthly payments. For example, on a $300,000 mortgage at 6%, a $10,000 payment might only save $60/month, while $50,000 could save $300/month. Always check with your lender about their specific minimum requirements and whether your loan type qualifies for recasting.

Only conventional mortgages are typically eligible for recasting. Government-backed loans like FHA, VA, and USDA mortgages generally cannot be recast. Some lenders may allow recasting on adjustable-rate mortgages (ARMs), but policies vary. If you have a conventional loan from major lenders like Chase, Bank of America, or Wells Fargo, you likely qualify. Contact your lender directly to confirm eligibility and understand their specific requirements for loan seasoning and payment history.

The break-even period depends on your monthly savings and the recast fee. For example, if recasting saves you $300/month and the fee is $250, you'll break even in less than one month. If you save $100/month with a $500 fee, break-even is 5 months. Our calculator shows your specific break-even period. Generally, you should plan to stay in your home at least 2-3 years beyond the break-even point to make recasting worthwhile. If you might move sooner, consider keeping the cash liquid instead.

Most lenders allow only one recast per loan, though some may permit multiple recasts with additional fees. Each recast requires meeting the lender's criteria again, including minimum payment amounts and good payment history. The more cost-effective strategy is to wait until you have a substantial lump sum that will create meaningful monthly savings. Some homeowners recast once with their initial down payment savings, then make regular extra principal payments afterward to accelerate payoff without additional fees.

Recasting reduces your required monthly payment, giving you cash flow flexibility. Extra principal payments shorten your loan term but keep payments the same. Choose recasting if you want lower monthly obligations to free up cash for other goals. Choose extra payments if your priority is paying off your mortgage faster and you can comfortably afford current payments. Some homeowners do both: recast to reduce required payments, then continue paying the original amount to accelerate payoff while maintaining flexibility.

Savings vary dramatically based on your loan amount, interest rate, remaining term, and lump sum payment. On a $350,000 mortgage at 6.8% with 20 years remaining, a $50,000 recast could save $380/month and over $91,000 in total interest. Our calculator shows your exact savings. Generally, recasting is more beneficial with larger loan balances, higher interest rates, and substantial lump-sum payments. Even modest recasts can save tens of thousands in interest over the loan's remaining term.

Mortgage recasting doesn't change the tax deductibility of your mortgage interest. You'll still be able to deduct interest paid on up to $750,000 of mortgage debt (or $1 million if your loan originated before December 15, 2017). However, because recasting reduces your total interest paid over the loan term, you'll have lower interest deductions in future years. This trade-off is usually beneficial since paying less interest means keeping more money. Consult a tax professional about your specific situation, especially if you have large mortgage balances.