Residential · Calculator
Interest-Only Recast
A 30- or 40-year fixed loan with a 10-year interest-only period. Pick the exact months you pay down principal and watch the loan recast, dropping both the interest-only payment and the fully-amortizing payment over the remaining term.
Loan Details
Fixed for the life of the loan.
Optional. Added to every payment, on top of any lump sums.
Principal Reductions
Pick the exact month you pay a lump sum. Each reduction recasts the loan — the interest-only payment drops the next month, and the amortizing payment recasts over the remaining term.
Lifetime Interest Saved
$219,217
vs. the same loan with no principal reductions
Payment Overview
Starting interest-only payment
$4,687.50
Month 1
Interest-only payment, final IO month
$4,062.50
Month 120
Fully-amortizing P&I begins
$4,544.89
Month 121 · was $5,244.11 with no reductions
What Each Reduction Does
Balance & Payment Over Time
Totals
Schedule
| Year | Phase | Payment (yr-end) | Interest | Principal | Ending Balance |
|---|---|---|---|---|---|
| 1 | IO | $4,687.50 | $56,250 | $100,000 | $650,000 |
| 2 | IO | $4,062.50 | $48,750 | $0 | $650,000 |
| 3 | IO | $4,062.50 | $48,750 | $0 | $650,000 |
| 4 | IO | $4,062.50 | $48,750 | $0 | $650,000 |
| 5 | IO | $4,062.50 | $48,750 | $0 | $650,000 |
| 6 | IO | $4,062.50 | $48,750 | $0 | $650,000 |
| 7 | IO | $4,062.50 | $48,750 | $0 | $650,000 |
| 8 | IO | $4,062.50 | $48,750 | $0 | $650,000 |
| 9 | IO | $4,062.50 | $48,750 | $0 | $650,000 |
| 10 | IO | $4,062.50 | $48,750 | $0 | $650,000 |
| 11 | P&I | $4,544.89 | $48,547 | $5,992 | $644,008 |
| 12 | P&I | $4,544.89 | $48,082 | $6,457 | $637,551 |
| 13 | P&I | $4,544.89 | $47,580 | $6,958 | $630,593 |
| 14 | P&I | $4,544.89 | $47,040 | $7,499 | $623,094 |
| 15 | P&I | $4,544.89 | $46,458 | $8,081 | $615,013 |
| 16 | P&I | $4,544.89 | $45,831 | $8,708 | $606,305 |
| 17 | P&I | $4,544.89 | $45,155 | $9,384 | $596,921 |
| 18 | P&I | $4,544.89 | $44,426 | $10,113 | $586,809 |
| 19 | P&I | $4,544.89 | $43,641 | $10,898 | $575,911 |
| 20 | P&I | $4,544.89 | $42,795 | $11,744 | $564,167 |
| 21 | P&I | $4,544.89 | $41,883 | $12,655 | $551,512 |
| 22 | P&I | $4,544.89 | $40,901 | $13,638 | $537,874 |
| 23 | P&I | $4,544.89 | $39,842 | $14,697 | $523,178 |
| 24 | P&I | $4,544.89 | $38,701 | $15,837 | $507,340 |
| 25 | P&I | $4,544.89 | $37,472 | $17,067 | $490,273 |
| 26 | P&I | $4,544.89 | $36,147 | $18,392 | $471,881 |
| 27 | P&I | $4,544.89 | $34,719 | $19,820 | $452,062 |
| 28 | P&I | $4,544.89 | $33,180 | $21,358 | $430,703 |
| 29 | P&I | $4,544.89 | $31,522 | $23,016 | $407,687 |
| 30 | P&I | $4,544.89 | $29,735 | $24,803 | $382,883 |
| 31 | P&I | $4,544.89 | $27,810 | $26,729 | $356,155 |
| 32 | P&I | $4,544.89 | $25,735 | $28,804 | $327,351 |
| 33 | P&I | $4,544.89 | $23,499 | $31,040 | $296,311 |
| 34 | P&I | $4,544.89 | $21,089 | $33,450 | $262,861 |
| 35 | P&I | $4,544.89 | $18,492 | $36,047 | $226,814 |
| 36 | P&I | $4,544.89 | $15,694 | $38,845 | $187,969 |
| 37 | P&I | $4,544.89 | $12,678 | $41,861 | $146,109 |
| 38 | P&I | $4,544.89 | $9,428 | $45,110 | $100,999 |
| 39 | P&I | $4,544.89 | $5,926 | $48,612 | $52,386 |
| 40 | P&I | $4,544.89 | $2,152 | $52,386 | $0 |
Estimates only, for illustration. Interest-only and 40-year products are typically non-QM or portfolio loans; availability, qualification, and recast policies vary by lender. Not a commitment to lend. Confirm your loan's specific recast terms with your loan officer.
Frequently asked
About this calculator.
What is an interest-only recast loan?
It is a fixed-rate loan with a set amortization term (commonly 30 or 40 years) that begins with an interest-only period, usually 10 years. During that period the required payment covers only the interest. Any time you pay down principal, the loan recasts: the interest-only payment drops the next month, and if you switch to a fully-amortizing payment it is re-amortized over the remaining term at the same fixed rate.
How does paying down principal lower my payment during the interest-only period?
Your interest-only payment is simply the balance times the monthly rate. Pay the balance down and next month’s interest is charged on the smaller number, so the payment is lower. For example, on a $1,000,000 loan at 6%, the interest-only payment is $5,000. Pay $100,000 to principal and the next month it drops to $4,500.
Does recasting shorten my loan term or lower my payment?
It lowers the payment and keeps the original maturity date. Re-amortizing the current balance over the remaining term spreads a smaller balance across the same number of months, so each payment is smaller. That is different from keeping the payment the same to pay the loan off early. If you want to pay it off early instead, keep making the higher payment after a reduction.
What does "amortized over the remaining term" mean after a reduction?
If you reduce principal after the first month of a 30-year loan, the remaining term is 29 years and 11 months (359 months), and the fully-amortizing payment is calculated on the new balance over those 359 months. Reduce it in month 60 and the recast is over the remaining months to the original payoff date. The rate never changes, so only the balance and the remaining term move.
Is recasting the same as refinancing?
No. A recast keeps your existing loan, note, and interest rate. There is no new application, no appraisal, and typically no closing costs beyond a small recast fee if any. Refinancing replaces the loan with a new one at whatever rate is available then. Because this product is fixed, a reduction recasts you to a lower payment without touching your rate.
What is the difference between the 30-year and 40-year option?
Both start with the same 10-year interest-only period. After it ends, the 30-year loan amortizes the balance over the remaining 20 years and the 40-year loan over the remaining 30 years. The 40-year spreads principal across more months, so the payment when amortization begins is lower, though more total interest accrues if no extra principal is paid.
Who is an interest-only recast loan good for?
Borrowers with lumpy income, business owners, commissioned professionals, and investors who expect to make periodic large principal reductions (a bonus, a business distribution, proceeds from a sale). The low interest-only floor keeps the required payment down, and every reduction permanently lowers both the interest-only and the recast payment. Talk to a loan officer about whether it fits your situation.
Are 40-year and interest-only loans qualified mortgages?
Generally no. Interest-only and 40-year terms fall outside the standard Qualified Mortgage definition, so they are usually offered as non-QM or portfolio loans. Guidelines, recast policies, and availability vary by lender. This calculator illustrates the mechanics; your actual terms come from your loan program.
Is an interest-only recast right for you?
Let’s model your exact scenario.
Interest-only and 40-year loans are specialty products with real trade-offs. We will walk through whether the recast structure fits your income and plans, and what you would actually qualify for.
Prefer to talk first? Call (305) 703-9001