A conventional home loan is a mortgage that is not backed by a government agency like the FHA, VA, or USDA.
These loans are typically offered by private lenders such as banks, credit unions, and mortgage companies.
They often adhere to guidelines set by Fannie Mae and Freddie Mac, government-sponsored enterprises that buy
mortgages from lenders. Conventional loans can be conforming (meeting Fannie Mae/Freddie Mac standards)
or non-conforming (like jumbo loans that exceed conforming limits).
Qualifying for a conventional loan generally requires a good credit score (typically 620 or higher),
a stable income, and a manageable debt-to-income ratio. A down payment is usually required, though
some programs allow for as little as 3% down.
How the Calculator Works:
This calculator uses the standard formula for calculating the monthly payment (M) of a mortgage:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (the amount you borrow)
i = Monthly interest rate (annual rate divided by 12)
n = Total number of payments (loan term in years multiplied by 12)
Example Calculation:
Let's say you want to borrow $300,000 (P) with an annual interest rate of 6.5%
and a loan term of 30 years.
Plugging these values into the formula:
M = 300000 [ 0.00541667(1 + 0.00541667)^360 ] / [ (1 + 0.00541667)^360 – 1]
M ≈ $1,896.20
This calculator will provide your estimated monthly principal and interest payment. Remember that
this figure typically does not include property taxes, homeowner's insurance, or Private Mortgage
Insurance (PMI), which would increase your total monthly housing cost.
Factors Affecting Your Payment:
Loan Amount: A larger loan means higher monthly payments.
Interest Rate: A higher interest rate significantly increases your monthly payment and the total interest paid over the loan's life.
Loan Term: Shorter loan terms have higher monthly payments but result in less total interest paid. Longer terms have lower monthly payments but more total interest.
Using this calculator can help you budget for a home purchase and understand the financial commitment
associated with a conventional mortgage.
function calculateMonthlyPayment() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var monthlyPaymentResult = document.getElementById("monthlyPayment");
// Clear previous results if inputs are invalid or empty
if (isNaN(loanAmount) || isNaN(interestRate) || isNaN(loanTerm) || loanAmount <= 0 || interestRate < 0 || loanTerm <= 0) {
monthlyPaymentResult.innerText = "$0.00";
return;
}
// Convert annual interest rate to monthly interest rate
var monthlyInterestRate = (interestRate / 100) / 12;
// Calculate the total number of payments
var numberOfPayments = loanTerm * 12;
// Calculate the monthly payment using the loan payment formula
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
// Format the monthly payment to two decimal places
monthlyPaymentResult.innerText = "$" + monthlyPayment.toFixed(2);
}
// Initial calculation on page load if values are pre-filled
document.addEventListener('DOMContentLoaded', function() {
// You can add default values here if you want them to be pre-filled
// document.getElementById("loanAmount").value = 300000;
// document.getElementById("interestRate").value = 6.5;
// document.getElementById("loanTerm").value = 30;
calculateMonthlyPayment();
});