A mortgage recast — the industry term is re-amortization — is when you make a large one-time payment toward your principal and ask your servicer to recalculate your monthly payment based on the new, smaller balance.

Three things stay exactly the same: your interest rate, your loan term, and your payoff date. Only the payment changes. That is the whole mechanism, and it is why recasting is so different from refinancing — there is no new loan, no credit check, no appraisal, and no closing costs.

Fannie Mae's Servicing Guide describes the operation precisely: after a substantial principal curtailment, the servicer may re-amortize the current unpaid principal balance using the existing interest rate and the remaining loan term, reducing the principal and interest payment only (Servicing Guide C-1.2-01).

A recast is the standard amortization formula run a second time, with a smaller principal and a shorter remaining term. Nothing exotic happens:

• Pnew — your new monthly principal & interest payment
• B — unpaid principal balance after the lump sum is applied
• r — your existing monthly rate (annual rate ÷ 12), unchanged
• n — months remaining on your original term, unchanged

The critical detail — and the one that causes most manual estimates to come out wrong — is that n is the remaining term, not the original term. If you are seven years into a 30-year loan, you re-amortize over 276 months, not 360. Using the original term will understate your new payment substantially.

A useful shortcut: because rate and term are held constant, the payment scales almost linearly with the balance. Cut your balance by 15% and your P&I drops by roughly 15%. This is why recasting is easy to reason about but also why it can't do anything clever — there's no rate arbitrage available.

The three scenarios this calculator compares:

1. Do nothing — baseline. Keep your balance and payment.
2. Lump sum + recast — smaller balance, re-amortized, lower payment, same payoff date.
3. Lump sum, no recast — smaller balance, but you keep paying the original payment. The extra above the newly-required amount goes to principal every month, so the loan retires early and total interest is lowest.

Scenario 3 always wins on interest. Scenario 2 always wins on monthly flexibility. The calculator quantifies the gap between them as Cost of Recasting vs. Just Prepaying — that number is the price of the lower payment.

1. Current loan balance — use the unpaid principal balance from your most recent mortgage statement. Do not use your original loan amount, and do not use your home's value. If your statement shows a payoff quote, that figure includes accrued interest and is slightly higher than your principal balance; use the principal.
2. Interest rate — the rate on your note. A recast does not change it, which is the entire reason people recast instead of refinancing when they hold a low pandemic-era rate.
3. Years remaining on term — count from today to your scheduled payoff date, not from origination. A 30-year loan taken out in 2021 has about 25 years left in 2026.
4. Lump sum — the principal-only payment you intend to make. Most servicers set a $10,000 floor (see the eligibility section below).
5. Recast fee — default is $250, the figure Rocket Mortgage publishes. Bankrate reports a typical range of $150 to $500. Confirm yours before you commit; some servicers charge nothing.
6. Ongoing extra monthly payment — optional. If you plan to keep overpaying after the recast, enter it here and all three scenarios will account for it.
7. Monthly escrow — optional, and it does not affect the recast math. A recast re-amortizes principal and interest only; your taxes and insurance are untouched. Enter it only if you want to see your true all-in payment.

Read the "Cost of Recasting vs. Just Prepaying" output before anything else. If that number is large relative to what the lower payment is worth to you, the recast may not be the right move even though it's available.

• New payment after recast — your new principal and interest. Your total bill will be this plus escrow, and escrow can drift independently at your servicer's annual analysis, so don't be surprised if the total isn't exactly what you projected.
• Monthly payment drop — the cash-flow benefit. This is the product you're actually buying.
• Interest saved vs. doing nothing — real savings. A smaller balance accrues less interest, so a recast does beat inaction.
• Cost of recasting vs. just prepaying — the number to focus on. This is the extra interest you pay because you took the lower payment instead of holding your payment steady. It is the price of cash flow, and on a large lump sum at a moderate rate it is frequently tens of thousands of dollars.
• Payoff comparison — recasting leaves your payoff date exactly where it was. Prepaying without recasting pulls it in, often by several years.

Neither answer is universally correct. Lower fixed obligations are a genuine form of risk reduction — if your income is variable, commission-based, or about to stop because you're retiring, a permanently smaller required payment has real value that an interest-savings calculation doesn't capture. The point is to make the trade knowingly rather than by accident.

These three tools look similar and do genuinely different things. The decision usually resolves on two questions: is today's market rate below your current rate, and do you need cash flow or a faster payoff?

Recast if your rate is already good, you have cash, and you want a permanently lower required payment. This is the dominant case for anyone holding a sub-4% note — refinancing would mean surrendering that rate, which is almost always a losing trade regardless of the closing costs.

Refinance if market rates are meaningfully below your current rate, or you need to change the loan itself — shorten the term, drop mortgage insurance, exit an ARM, or pull cash out. Refinancing is the only one of the three that can change your rate. Model it with our Refinance Analyzer before deciding.

Just make extra payments if your goal is to be debt-free soonest and you don't need the monthly relief. Every dollar of interest saved is a guaranteed, tax-free return equal to your mortgage rate. Our Advanced Mortgage Calculator models extra payments against a full amortization schedule.

One combination worth knowing: if your lump sum drops your loan-to-value to 80% or below, you may be able to recast and request cancellation of private mortgage insurance at the same time. Under the Homeowners Protection Act, borrowers on conventional loans can request PMI cancellation at 80% LTV subject to seasoning and payment-history conditions — the CFPB explains the thresholds. These are separate requests; your servicer will not volunteer the second one.

Recasting is a servicer courtesy, not a borrower right. Nothing obligates a servicer to offer it. In practice, eligibility turns on five things:

1. Loan type — conventional only. FHA, VA, and USDA loans cannot be recast. Rocket Mortgage states this directly, and it follows from those programs' own servicing rules rather than from lender preference. If you hold a government-backed loan, your options are extra payments or a refinance into a conventional loan. Jumbo and portfolio loans vary by servicer.
2. A minimum lump sum. $10,000 is the most commonly cited floor. Some servicers accept $5,000; some require a percentage of the balance instead; a few set the bar as high as $50,000. Rocket Mortgage's published rule is $10,000 in principal reduction since closing or the last recast — notably, it does not have to arrive as a single payment, which means cumulative extra payments can qualify you.
3. Loan in good standing. Servicers generally want a clean recent payment history. Chase's disclosure requires the loan to be in good standing but no credit check. Rocket requires at least two consecutive on-time payments and that you not be paying ahead.
4. Seasoning. Many servicers require the loan to be a few months old. Mr. Cooper notes that recently transferred accounts may need to wait 90 days.
5. Equity. Some servicers impose a minimum equity threshold, as a dollar figure or a percentage. This is inconsistently applied and often waived in practice, since a recast makes the lender's position safer, not riskier.

On the back end, if your loan was sold to Fannie Mae, the paperwork is standardized: the servicer completes the Agreement for Modification, Re-Amortization, or Extension of a Mortgage (Form 181) and retains it in the servicing file, and re-amortized loans are delivered with Special Feature Code 76 (Selling Guide B2-1.5-02). You will typically sign a recast agreement and provide nothing else — no income documentation, no appraisal.

Servicer terms change without notice, and the servicer on your loan today may not be the one that originated it. Treat this table as a starting point for the phone call, not as an answer.

Compiled July 2026 from servicer disclosures and reporting by Bankrate, U.S. News, and CNBC Select. We publish "not published" rather than a number when a servicer has not disclosed one — figures for Wells Fargo and Bank of America circulate on comparison sites without primary sourcing, and we won't repeat them. Verify with your servicer before sending funds.

Two questions to ask on that call, in this order: Is my specific loan eligible for a recast? and What is the exact fee and minimum for my loan? Eligibility first — it prevents wasted effort if the answer is no.

Megan owes $375,000 at 5.875% with 26 years remaining. Her P&I is $2,347. She inherits $60,000 and her servicer charges a $250 recast fee.

Recasting hands Megan $376/month back, permanently, and saves about $57,000 in interest against doing nothing. Making the identical payment and not recasting saves about $158,000 and retires the loan nearly eight years early.

The gap between those two — roughly $101,000 — is what Megan pays for the lower monthly payment. That is not a rounding error; it is more than a quarter of her original balance. Whether it's worth it depends on facts the math doesn't know. If she's retiring in three years, a permanently lower obligation may be worth it. If she's mid-career with stable income and a funded emergency fund, it's an expensive convenience.

A third option the table doesn't show: recast and keep paying $2,347 anyway. She lands on the bottom row's economics while retaining the right to fall back to $1,972 in a bad year. For anyone with the discipline to do it, this is usually the best available answer.

Figures computed by this calculator and verified against the amortization formula in Fannie Mae Servicing Guide C-1.2-01. Your servicer's numbers will differ slightly based on payment timing and how interest accrues on your note.