Loan Recast Calculator
Use this loan recast calculator to estimate how a lump-sum payment could change your mortgage payment. In the space provided, enter your current loan balance, interest rate, remaining loan term, lump-sum payment, and any recast fee.
The calculator will then estimate your new loan balance, monthly principal-and-interest (P&I) payment, and potential savings.
Loan Recast Calculator
| Before Recast | After Recast | |
|---|---|---|
| Mortgage Balance | — | — |
| Interest Rate | — | — |
| Monthly P&I | — | — |
| Remaining Term | — | — |
| Principal Reduction | — | — |
| Year | Principal | Interest | Remaining Balance |
|---|
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What Is a Loan Recast?
A loan recast, also called a mortgage recast, is a way to lower your required monthly mortgage payment without refinancing your loan.
It involves you making a substantial lump-sum payment toward your principal, and your lender then recalculates your remaining payments based on the lower loan balance.
Your interest rate and remaining loan term generally stay the same. The main change is your monthly principal-and-interest (P&I) payment, which is recalculated using the smaller balance. Because you pay down part of your principal upfront, you may also pay less interest over the remaining life of the loan.
Note: Not all mortgages are eligible for a recast. Loan recast availability, minimum payment requirements, and fees vary by lender and loan type. Recasting is more commonly available with conventional mortgages, while many government-backed loans, including FHA, VA, and USDA loans, are generally not eligible.
You need to check your lender or loan servicer to confirm whether your mortgage qualifies.
How to Use the Loan Recast Calculator
Using our loan recast calculator is simple and straightforward. You are to enter information below in the space provided
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Current Loan Balance: Enter the remaining principal balance on your mortgage.
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Interest Rate: Enter your current annual mortgage interest rate.
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Remaining Loan Term: Enter the number of years or months remaining on your loan.
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Lump-Sum Payment: Enter the amount you plan to pay toward your principal.
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Recast Fee: Enter any recast fee charged by your lender, if applicable.
The calculator will then display your estimated new loan balance, recalculated monthly P&I payment, monthly savings, annual savings, and potential change in total interest.
How Does a Loan Recast Calculator Work?
Our loan recast calculator estimates how your mortgage payment could change after you make a lump-sum payment toward your principal.
First, the calculator subtracts your lump-sum payment from your current loan balance to estimate your new balance. It then recalculates your monthly principal-and-interest (P&I) payment using the lower balance, your existing interest rate, and the number of payments remaining on your loan.
For example, if you have a $300,000 balance and make a $50,000 lump-sum payment, the calculator would use the estimated $250,000 balance to calculate your new monthly payment.
The calculator can then show your estimated new payment, monthly savings, annual savings, and potential interest savings.
Loan Recast Formula
For a fixed-rate mortgage, you can estimate the new monthly principal-and-interest (P&I) payment using the standard amortization formula:
M = P × [r(1 + r)^n] / [(1 + r)^n − 1]Where:
- M = estimated monthly principal-and-interest payment
- P = new loan balance after your lump-sum payment
- r = monthly interest rate (annual interest rate ÷ 12)
- n = number of remaining monthly payments (remaining years × 12)
The calculator uses this formula to estimate your new monthly P&I payment after you enter your current loan balance, interest rate, remaining term, and lump-sum payment.
Loan Recast Example
Suppose you have a 30-year fixed mortgage of $350,000 at 6.8% interest. Your original monthly principal-and-interest (P&I) payment would be about $2,282.
If you make a $50,000 lump-sum payment toward the principal, you get a reduced loan balance. The lender then re-amortizes the remaining balance over the remaining term.
In the example, the payment falls from about $2,282 to $1,900 per month, reducing the monthly P&I payment by approximately $382.
These figures are for illustration only. Your actual recast payment will depend on your current loan balance, interest rate, remaining term, lump-sum payment, and your lender’s recast terms and fees.
What Does a Loan Recast Do?
A loan recast can:
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Lower your monthly payment: Your required monthly principal-and-interest (P&I) payment may decrease because you owe less principal.
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Keep your current interest rate and remaining term: A recast generally does not change your interest rate or remaining loan term. Your payment is simply recalculated using the lower balance.
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Reduce the interest you pay: Since your loan balance is lower, you may pay less interest over the remaining life of the loan.
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Keep the original payoff schedule: A recast generally does not shorten your loan term. You continue making payments over the remaining term, but your required monthly P&I payment may be lower.
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Potentially reduce PMI: If you have private mortgage insurance (PMI), paying down your principal may help you reach the equity level needed to cancel PMI. However, PMI cancellation depends on your loan terms and lender requirements.
Use our loan recast calculator to estimate your new monthly payment after a lump-sum principal payment. Enter your current loan balance, interest rate, remaining loan term, and lump-sum payment. The calculator will then display your estimated new payment and potential monthly savings
Loan Recast vs. Refinancing
A loan recast and a refinance can both change your mortgage payment, but they work in different ways. A recast keeps your existing mortgage, while refinancing replaces your current loan with a new one.
| Feature | Loan Recast | Refinancing |
|---|---|---|
| Large principal payment | Usually required | Not required |
| New loan | No. Your existing loan stays in place. | Yes. Your current loan is replaced with a new loan. |
| Interest rate | Generally stays the same | Changes to the new loan’s rate |
| Loan term | Generally stays the same | Can change, such as to a new 15- or 30-year term |
| Monthly payment | Usually decreases because your balance is lower | May decrease or increase depending on the new rate, balance, and term |
| Closing costs | Usually lower, often involving a recast fee | Usually higher because of costs such as appraisal, title, and loan fees |
| New underwriting | Usually not required | Usually required |
Which Option Is Right for You?
A loan recast may make sense if you have a large amount of money available to put toward your principal and you are happy with your current interest rate. You can keep your existing loan while potentially lowering your required monthly payment.
Refinancing may be worth considering if you want to change your interest rate, loan term, or other loan features. However, refinancing usually involves a new loan application and additional closing costs.
Use our loan recast calculator to estimate how a lump-sum payment could affect your monthly payment. Enter your current loan balance, interest rate, remaining loan term, and lump-sum payment. The calculator will then display your estimated new payment and potential monthly savings.
Keep in mind that recast requirements, fees, and eligibility vary by lender and loan type. Check with your lender or loan servicer for the terms that apply to your mortgage.
Does a Loan Recast Save Money?
A loan recast may save you money by reducing your loan balance and lowering your required monthly principal-and-interest (P&I) payment. Because you owe less principal after the lump-sum payment, you may also pay less interest over the remaining life of the loan.
Your monthly savings is the difference between your current P&I payment and your estimated new P&I payment after the recast.
Monthly savings = Current payment − New payment
You can also estimate your annual savings by multiplying your monthly savings by 12.
Annual savings = Monthly savings × 12
For example, if your monthly payment drops from $2,282 to $1,900, your estimated monthly savings would be about $382. Your estimated annual payment savings would be about $4,584.
Keep in mind that a recast requires you to put money toward your principal upfront. You may also have to pay a recast fee. This means your payment savings should be considered alongside the amount of cash you use and any fees charged by your lender.
Use our loan recast calculator to estimate your new monthly payment, monthly savings, annual savings, and potential interest savings after a lump-sum payment.
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Frequently Asked Questions
What is a loan recast calculator?
A loan recast calculator is a tool that estimates your new monthly mortgage payment after you make a lump-sum payment toward your principal. Enter your current loan balance, interest rate, remaining term, lump-sum payment, and any recast fee. The calculator will then display your estimated new principal-and-interest (P&I) payment and potential savings.
How much can a mortgage recast lower?
It depends on your loan balance, interest rate, remaining term, and the amount you pay toward your principal. A larger lump-sum payment generally results in a larger reduction in your required monthly P&I payment. For example, a $50,000 principal payment in an illustrative scenario reduced the monthly payment from about $2,282 to $1,900. Your results will depend on your specific loan details.
How is a recast mortgage payment calculated?
After your lump-sum payment reduces the loan balance, the remaining balance is re-amortized over the remaining term. The calculator uses the standard amortization formula to estimate your new monthly P&I payment:
M = P × [r(1 + r)^n] / [(1 + r)^n − 1]
Here, P is your new loan balance, r is your monthly interest rate, and n is the number of remaining monthly payments.
Does a loan recast lower the interest rate?
No. A loan recast generally does not change your mortgage interest rate. You keep your existing rate, while your loan balance and required monthly P&I payment are recalculated.
Does a mortgage recast shorten the loan term?
Generally, no. Your remaining loan term stays the same after a recast. You continue making payments according to the original schedule, but your required monthly P&I payment may be lower. You could pay off the loan sooner if you choose to continue making extra principal payments.
How much do I need to pay to recast my mortgage?
There is no single amount that applies to every mortgage. Some lenders require a minimum lump-sum payment, while others may have different requirements or restrictions. A recast fee may also apply. Check with your lender or loan servicer to find out how much you need to pay and what fees apply.
Does every lender offer mortgage recasting?
No. Not every lender or loan servicer offers mortgage recasting. Eligibility also depends on your loan type and the terms of your mortgage. Conventional loans may be eligible with certain lenders, while many government-backed loans have restrictions on recasting. Check with your lender or servicer before making a lump-sum payment specifically for a recast.
Is a loan recast better than refinancing?
It depends on what you want to accomplish. A recast may be useful if you are happy with your current interest rate and want to lower your required monthly payment after making a large principal payment.
Refinancing may make more sense if you want to change your interest rate, loan term, or other loan features. Refinancing replaces your existing mortgage with a new loan and may involve additional closing costs.
Does recasting reduce total interest?
A recast may reduce the total interest you pay because your principal balance is lower after the lump-sum payment. The amount you may save depends on your remaining balance, interest rate, remaining term, timing of the payment, and any recast fees.
Use the loan recast calculator to estimate your remaining interest before and after the recast and see your potential interest savings.
Can I use an extra mortgage payment to recast my loan?
Not automatically. Making an extra principal payment reduces your loan balance and can help you pay less interest, but it does not normally reduce your required monthly payment by itself.
If you want your required payment recalculated, you need to request a recast from your lender or loan servicer and meet its eligibility requirements.
Are taxes and insurance included in a recast payment?
No. A recast generally affects only the principal-and-interest portion of your mortgage payment. Your property taxes, homeowners insurance, HOA fees, and other costs not included in the loan recast.
The loan recast calculator estimates your P&I payment and does not include these additional costs.
Can I recast an FHA, VA, or USDA loan?
Eligibility depends on the loan program and servicer, but FHA, VA, and USDA mortgages generally have restrictions that can make a traditional recast unavailable. Recast options are more commonly associated with certain conventional mortgages.
If you have an FHA, VA, or USDA loan, check with your loan servicer to confirm whether any principal reduction or payment recalculation option is available
