Methodology

Every calculator on RecastCalc uses the standard mortgage amortization formula, applied transparently. This page documents the math, the assumptions, and the limitations.

Standard payment formula

All monthly payment calculations use the standard fixed-rate amortization formula:

M = P × [r(1+r)^n] / [(1+r)^n − 1]

where:
  M = monthly payment (principal + interest only)
  P = principal balance
  r = monthly interest rate (annual rate ÷ 12)
  n = number of payments (term in months)

Recast calculation

A recast applies a lump sum to principal, then re-amortizes the remaining balance over the original remaining term at the original interest rate.

1. New balance = current balance − lump sum
2. New monthly payment = standard amortization formula applied to (new balance, original rate, original remaining term)
3. Total interest = (new payment × remaining term) − new balance

We compare three scenarios in every recast calculation:

• Baseline (do nothing): Continue paying the current payment over the remaining term.
• Recast: Apply lump sum, payment recalculated.
• Lump sum + extra payment: Apply lump sum, but continue paying the original (higher) payment until loan is paid off early.

What's included and what isn't

Included

• Principal repayment
• Interest at the stated rate, compounded monthly
• Recast fee (one-time)

Excluded

• Property taxes
• Homeowners insurance
• Private mortgage insurance (PMI) — see our PMI Removal Calculator
• HOA fees
• Escrow account adjustments
• Tax effects (mortgage interest deduction varies by individual situation)

For a complete monthly housing cost, add your tax + insurance + PMI + HOA estimates to the P&I figure shown by our calculator.

Assumptions

• Interest rate is fixed for the full remaining term (does not model ARM resets)
• Payments are made on time each month with no missed or partial payments
• Recast lump sum is applied as a single payment, not spread over time
• The loan permits recasting (not all do — see our lender table)
• No prepayment penalty (rare on conventional loans, but verify your specific loan documents)

Sources

• Consumer Financial Protection Bureau (CFPB) — mortgage payment guidance
• Freddie Mac Servicing Guide — recast / re-amortization standards
• Fannie Mae Selling Guide — eligibility for re-amortization
• IRS Publication 936 — mortgage interest deduction rules
• Direct lender disclosure documents and servicing FAQs (Chase, Wells Fargo, Bank of America, US Bank, PNC, Citizens, Truist, Navy Federal Credit Union, and others as cited in the lender table)

Updates

Calculator formulas are reviewed and tested annually. Lender policy data (recast fees, minimum lump sums, eligibility) is reviewed quarterly. Each calculator page displays the "last updated" date in the footer.

Errors and corrections

If you find a math error, a lender policy that's out of date, or any other issue, please contact us via the contact page. Corrections are typically made within 48 hours.

Not financial advice

Calculator results are estimates based on the inputs provided. RecastCalc is not a lender, broker, or financial advisor and does not provide personalized financial advice. Consult a licensed mortgage professional and/or Certified Financial Planner before making decisions.