David is a Chartered Financial Analyst and a senior mortgage underwriter with 15 years of experience, specializing in conventional loan products and GSE guidelines.
This 4-in-1 Conventional Loan calculator helps you find the missing variable in your mortgage. Enter any three values—Loan Amount, Rate, Term, or Payment—and we will solve for the fourth.
Conventional Loan Calculator
Conventional Loan (Amortization) Formulas
i = R / 12 / 100 (Monthly Rate)
n = T * 12 (Number of Months)
Solve for Monthly Payment (M):
M = P * [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Solve for Loan Amount (P):
P = M * [ (1 + i)^n – 1 ] / [ i(1 + i)^n ]
Solve for Term (n):
n = log( M / (M – P*i) ) / log(1 + i)
Solve for Rate (i):
(No direct formula; solved iteratively)
Formula Variables
- (P) Loan Amount: The total amount you are borrowing (Principal).
- (R) Annual Rate: The fixed Annual Percentage Rate (APR) for the loan.
- (T) Loan Term: The length of the loan, typically 15 or 30 years for conventional loans.
- (M) Monthly Payment: The fixed monthly payment (Principal & Interest). This does *not* include property taxes, homeowners insurance (PITI), or Private Mortgage Insurance (PMI).
Related Calculators
- Mortgage Payment Calculator
- FHA Loan Calculator
- Loan to Value (LTV) Calculator
- Debt to Income (DTI) Calculator
What is a Conventional Loan?
A conventional loan is any mortgage that is not insured or guaranteed by the federal government. This is the most common type of home loan, distinguishing it from government-backed programs like FHA, VA, or USDA loans. Because the government does not insure these loans, lenders (like banks and credit unions) take on more risk.
To manage this risk, conventional loans typically have stricter qualification requirements. You generally need a higher credit score (e.g., 620 or higher) and a lower Debt-to-Income (DTI) ratio compared to an FHA loan. The main advantage is that if you have good credit and a down payment of 20% or more, you can avoid paying Private Mortgage Insurance (PMI), making your total monthly payment lower.
Conventional loans are often called “conforming” loans, which means they follow the guidelines set by Fannie Mae and Freddie Mac (GSEs) and are below the loan limit for your area. Loans above this limit are called “jumbo” loans.
How to Calculate a Conventional Loan Payment (Example)
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Identify New Loan Variables
You are getting a 30-year fixed conventional loan for $350,000.
• Loan Amount (P): $350,000
• Annual Rate (R): 7.1%
• Loan Term (T): 30 years -
Convert to Monthly Terms (i, n)
The formula uses monthly values:
• Monthly Rate (i): 7.1% / 12 / 100 = 0.0059167
• Number of Months (n): 30 years * 12 = 360 -
Choose the Payment Formula
Use the standard formula to solve for Monthly Payment (M):
M = P * [ i(1 + i)^n ] / [ (1 + i)^n – 1 ] -
Calculate the Monthly Payment
Plug in the monthly values:
• Numerator: 0.0059167 * (1 + 0.0059167)^360 = 0.05039
• Denominator: (1 + 0.0059167)^360 – 1 = 7.503
M = $350,000 * [ 0.05039 / 7.503 ]
M = $350,000 * 0.006716 = $2,350.60
Your new monthly P&I payment will be $2,350.60.
Frequently Asked Questions (FAQ)
What is PITI?
PITI stands for Principal, Interest, Taxes, and Insurance. This calculator solves for P&I (Principal & Interest). Your total monthly housing payment (PITI) will also include property taxes and homeowners insurance, which are often paid into an escrow account monthly.
What is PMI?
Private Mortgage Insurance (PMI) is an insurance policy required by conventional lenders when your down payment is less than 20% (LTV > 80%). It protects the lender if you default. This calculator does *not* include PMI, which would be an additional monthly cost.
What’s the difference between Conventional and FHA loans?
FHA loans are government-insured, making them easier to qualify for with lower credit scores and higher DTI ratios. However, they require Mortgage Insurance Premium (MIP) for most of the loan’s life. Conventional loans are stricter but allow you to avoid mortgage insurance with a 20% down payment.
What is a “conforming” loan limit?
This is the maximum loan amount Fannie Mae and Freddie Mac will buy. In 2024, this limit is $766,550 for most of the U.S., but higher in high-cost areas. A loan *above* this limit is a “jumbo loan” and may have different rates and requirements.