What this calculator does
You enter the current loan balance, the interest rate, the remaining term in years and a lump-sum payment. The calculator works out the current principal and interest payment, subtracts the lump sum from the balance, and recalculates the payment on the lower balance at the same rate over the same remaining term. It shows the new payment, how much it falls, and how much the payment falls for each $10,000 paid down.
That recalculation is what a recast is. The Fannie Mae Servicing Guide describes it as a re-amortization after a substantial principal curtailment, "based on a re-amortization of the current UPB and using the current interest rate and remaining loan term". The calculator covers principal and interest only; taxes and insurance paid through escrow are unchanged by a recast.
How the math works
The payment on a fixed-rate loan is M = P [ r(1 + r)^n ] / [ (1 + r)^n - 1 ], where P is the balance, r the monthly rate (annual rate divided by 12) and n the number of monthly payments left. The calculator computes M twice: once on the current balance and once on the balance minus the lump sum, with the same r and n both times.
Because the formula is proportional to P, the drop in payment is the lump sum times a fixed factor for the rate and term. At 3.5% with 25 years left, each $10,000 lowers the payment by $50.06, whatever the starting balance. The factor is larger at higher rates and at shorter remaining terms, which the table below shows. The calculator does not model a recast fee, a minimum lump sum, or the interest saved over the life of the loan.
Worked example
A borrower owes $400,000 at 3.5% with 25 years (300 payments) left. The principal and interest payment is $2,002.49. They pay $50,000 toward principal, leaving $350,000.
Without a recast, the required payment stays $2,002.49 and the extra principal shortens the loan instead. With a recast, the servicer recalculates the payment on $350,000 at 3.5% over the same 300 months: $1,752.18, which is $250.31 a month lower. That is five times the $50.06 per-$10,000 figure. At 6.5% instead of 3.5%, the same balance and lump sum take the payment from $2,700.83 to $2,363.23, a drop of $337.60.
Payment drop per $10,000 paid down
Each cell is the monthly principal and interest payment on $10,000, from the page's own formula, which equals the drop in the required payment for each $10,000 of lump sum when the loan is recast.
| Rate | 10 years left | 15 years left | 20 years left | 25 years left |
|---|---|---|---|---|
| 3.0% | $96.56 | $69.06 | $55.46 | $47.42 |
| 4.5% | $103.64 | $76.50 | $63.26 | $55.58 |
| 6.0% | $111.02 | $84.39 | $71.64 | $64.43 |
| 7.5% | $118.70 | $92.70 | $80.56 | $73.90 |
The remaining term matters more than the rate. With 10 years left at 3.0%, $10,000 lowers the payment by $96.56; with 25 years left at 7.5%, by $73.90. Late in a loan most of each payment is principal, so removing principal removes more of the payment. For the default loan, a $25,000 lump sum lowers the payment by $125.16, $50,000 by $250.31 and $100,000 by $500.62.
Recast, extra principal or refinance
The three options use a lump sum or a new loan differently. The table summarizes what changes, with the rule behind each entry.
| Extra principal, no recast | Recast | Refinance | |
|---|---|---|---|
| Loan | Same loan | Same loan; Fannie Mae has servicers document it on its Form 181 | Old loan paid off and replaced by a new obligation (Reg Z § 1026.20(a)) |
| Interest rate | Unchanged | Unchanged | Set by the new loan |
| Required payment | Unchanged; the loan is paid off sooner | Lower, over the same remaining term | Set by the new rate, balance and term |
| Who decides | The servicer must accept and apply a principal curtailment on a current Fannie Mae loan | The servicer may agree after a substantial curtailment; it is not required | A new lender, with new disclosures and closing costs |
| Prepayment penalty | Only if the note has one; the CFPB says penalties do not normally apply to small extra payments but in some cases can apply to a large lump sum | Same as extra principal | May apply if the note has one and the payoff is within the penalty period |
Paying extra principal without a recast and recasting start from the same lump sum. The difference is what happens next: without a recast the required payment stays the same and the loan ends earlier; with a recast the payment falls and the end date stays the same. Keeping the old payment after a recast, voluntarily, puts the borrower back on the faster payoff path, so a recast mainly adds flexibility over the required amount. The Fannie Mae guide also states that a re-amortization is not counted as a loan modification when a borrower's eligibility for a later modification is assessed. A refinance is the only one of the three that can change the rate, and the CFPB lists appraisal, title insurance and government taxes among the costs of closing a mortgage.
Frequently Asked Questions
A recast keeps the existing loan and recalculates the payment on a lower balance at the same rate and remaining term. A refinance satisfies the existing loan and replaces it with a new one, which Regulation Z treats as a new transaction requiring new disclosures, and which comes with its own rate and closing costs.
Not under the Fannie Mae Servicing Guide. It requires servicers to accept and apply extra principal on a current loan, but says the servicer "may" agree to re-amortize after a substantial principal curtailment. Other loan types and servicers set their own rules, including any minimum lump sum and fee, so ask the servicer before sending the payment.
No. The re-amortization uses the current interest rate and the remaining term. Only the balance changes, so only the payment changes.
They start from the same payment toward principal. Without a recast the required payment stays the same and the loan is paid off sooner; with a recast the required payment drops and the end date stays the same. Which suits a borrower depends on whether a lower required payment or an earlier payoff matters more; paying the old amount after a recast gives a similar payoff path with a lower required minimum.
It equals the payment on a $10,000 loan at your rate and remaining term. At 3.5% with 25 years left it is $50.06 a month; at 6.0% with 15 years left it is $84.39. The drop does not depend on the size of the remaining balance.
Sources
- Fannie Mae Servicing Guide C-1.2-01, Processing Additional Principal Payments
- Fannie Mae Servicing Guide F-1-09, Processing Mortgage Loan Payments and Payoffs
- Regulation Z, 12 CFR § 1026.20(a), Refinancings
- CFPB, What is a prepayment penalty?
- CFPB, What fees or charges are paid when closing on a mortgage?
Disclaimer: This tool is provided for educational and scenario-analysis purposes only. It is not financial, legal, or investment advice. Actual loan modifications, recast fees, and amortization schedules depend on your specific mortgage servicer's internal policies and your promissory note. Please consult a licensed financial advisor or your lender directly before making large principal payments.
Built and verified by The Breakeven Math — last reviewed September 18, 2026.