Mortgage Calculator

How to Calculate Your Monthly Conventional Loan Payment

Here's a quick breakdown of the different terms you should be familiar with when using ourconventional loan payment estimator.

Home Value

This is the total amount you anticipate paying for your home. Be sure to enter the full purchase price, not just the amount you need to borrow.

Down Payment

How much money do you plan to put down on your purchase? Conventional down payments can vary by loan program, with a minimum requirement of 3% or 5%, depending on your eligibility.

You can enter your down payment as either a fixed amount or a percentage of your purchase price. Some borrowers may qualify fordown payment assistance to offset this expense.

Interest Rate

Your interest rate is a major factor in calculating your monthly payments. Higher interest rates equate to higher costs. Your lender will determine your eligible interest rate based on your financial profile and financing needs.

Loan Term

The loan term is the length of time that you plan to finance your mortgage. The majority of homebuyers opt for a 30-year term, although some prefer a more compact 15-year repayment schedule.

Choosing a loan term of 30 years will result in lower monthly payments but higher overall interest expenses. Conversely, a 15-year term will require you to pay more each month but can substantially reduce your lifetime interest costs.

Loan Type

Our conventional mortgage calculator allows you to estimate your monthly payments for multiple types of conventional loans:

• Purchase Loan – Conventional purchase loans are used when obtaining a new mortgage to finance the acquisition of property.
• Interest Rate Reduction Refinance – If you currently have a mortgage, a conventional interest rate reduction refinance (or “rate-and-term refinance) can help you lower your monthly payments. A conventional loan refinance can replace any type of loan.
• Cash-Out Refinance – A conventional cash-out refinance allows existing homeowners with sufficient equity in their property to refinance and receive a lump sum of cash at closing. You can apply for a conventionalcash-out refinance regardless of your current loan type and are able to use the funds for any purpose you choose.

Property Tax Rate

Property taxes are typically included in your monthly mortgage payments, with costs varying from location to location. Our conventional loan calculator assumes an annual property tax rate of 1.2% of the purchase price. However, you can edit this field to reflect your local tax rates more accurately.

Homeowner’s Insurance

Mortgage providers require borrowers to carry homeowner’s insurance to protect the financed property from substantial damage or loss. The cost of homeowner’s insurance will vary by location, with the MRC conventional home loan calculator assuming a default annual rate of 0.35% of the property’s purchase price.

Principal and Interest

Principal and interest costs make up the bulk of most monthly housing payments. This is the amount of the borrowed balance you must repay each month, along with the associated interest charges due to your lender in exchange for financing your mortgage.

A loan's monthly principal and interest payment is calculated with the equation:

• M = monthly mortgage payment
• P = total borrowed principal
• r = monthly interest rate (annual interest rate divided by 12)
• n = total number of monthly payments (180 for a 15-year mortgage or 360 for a 30-year mortgage)

Private Mortgage Insurance (PMI)

All conventional borrowers making less than a 20% down payment (or refinancing homeowners withless than 20% equity) are required to carry private mortgage insurance (PMI). Unlike homeowner's insurance, which protects a property against damage or loss, PMI provides a financial guarantee to lenders in the event a borrower stops making their monthly mortgage payments.

Conventional private mortgage insurance is risk-based, meaning homeowners with lower credit scores will pay higher premiums than those with exceptional credit. The size of your down payment and the length of your loan can also affect PMI rates.

Our conventional mortgage calculator provides an estimation of PMI. However, true costs will vary based on your financial profile and insurance provider.

Other Costs to Expect

Here are a few other costs that you may be responsible for, in addition to your monthly mortgage payments, when buying a home or taking out a conventional loan.

Closing Costs

Closing costs are the expenses related to purchasing property and obtaining a mortgage. These can include charges from your lender, closing agent, and other third parties that provide services associated with the acquisition and financing processes.

The MRC conventional loan mortgage calculator does not include closing costs, as these are typically paid as a lump sum when obtaining your loan and not as part of your monthly payments. For most borrowers,conventional closing costs can be expected to run between 2% and 4% of the total amount financed.

Closing costs are generally due at closing, although certain companies may allow you to finance the expense into your loan. In some cases, lenders may offer to pay your closing costs in exchange for you accepting a marginally higher interest rate on your mortgage.

Many borrowers may also qualify forclosing cost assistance to help cover some or all of these expenses.

Appraisal and Inspection

Nearly all conventional borrowers will be required to obtain an appraisal on the property they’re financing. This helps to ensure that the mortgage provider is not over-lending and the borrower is not paying more than the fair market value for their home.

Appraisal and inspection costs can vary by locale, with conventional buyers paying between $350 and $600 on average.

HOA Dues

Properties located within a homeowners association typically have HOA dues assessed annually, semi-annually, quarterly, or monthly. These costs are commonly paid directly to the association and are not included in your mortgage payments.

Conventional Loan Rates

Conventional loan rates are determined by your lender and based on factors that include your:

• Credit score and profile
• Down payment
• Loan type
• Loan term

While overall market conditions provide a base for conventional interest rates, actual costs can vary from one lender to the next. Conventional loan rates are generally higher than government-backed mortgage alternatives, although borrowers with excellent credit scores may still find lower monthly payments through conventional lenders.

As a rule of thumb, you should apply with at least three different mortgage companies in order to compare rates and obtain the lowest overall costs. In many cases, borrowers can use loan estimates from one lender to negotiate lower interest rates and reduced closing costs from competing mortgage providers.

Conventional Loan Limits

All conventional mortgages must abide by the loan limits established by the Federal Housing Finance Agency (FHFA). These limits are based on the property’s location and number of individual residences. Conventional loan limits are adjusted annually to account for rising home costs.

Borrowers who need to finance more than the maximum loan amount for their area will want to considerjumbo loans, classified as any mortgage that exceeds current local FHFA limits. Jumbo loans are typically more difficult to qualify for than conventional mortgages and often come with higher interest rates.

Single-Family Conventional Loan Limits

For most areas of the country, the 2025 conventional limit for a single-family home is $806,500. Communities with a higher cost of living may have expanded limits – currently as much as $1,209,750 for single-unit properties in some parts of the United States.

Location Designation	2025 Conventional Loan Limits
Standard	$806,500
High-Cost Area	$1,209,750

Some higher-cost areas will have limits that are in between these two figures. You can check out theFannie Mae loan limit tool for an accurate picture of current conventional mortgage limits in your community.

2-4 Unit Conventional Loan Limits

Properties with additional residential units have higher loan limits. Conventional guidelines allow you to purchase a home with up to four residences.

# of Units	2025 Standard Loan Limits	2025 High-Cost Loan Limits
Two-Unit	$1,032,650	$1,548,975
Thee-Unit	$1,248,150	$1,872,225
Four-Unit	$1,551,250	$2,326,875

As with mortgages on single-family properties, some areas may have multifamily loan limits between these amounts.

Conventional Loan Eligibility Requirements

Obtaining a conventional loan means meeting conventional eligibility requirements. Mortgage companies follow the standards established by Fannie Mae and Freddie Mac, which require:

• Minimum credit score of 620
• Down payment of either 3% or 5%, depending on your income level and current homeownership status
• Debt-to-income (DTI) ratio that’s no higher than 50%, including the cost of the mortgage you’re applying for
• Two years of consistent employment with a stable or increasing income level
• Recent credit history free from major adverse events such asbankruptcy or foreclosure

All conventional mortgage providers must abide by these minimum conventional loan eligibility requirements. However, companies can still set their own more restrictive lending policies. These are referred to as lender overlays.

If you meet all of the standard eligibility requirements but are denied by a lender due to their overlays, you may still be able to qualify for a loan by applying with another company.

How Conventional Loans Differ from Other Mortgage Types

In addition to conventional loans, lenders offer a variety of other mortgages – many of which are backed by the federal government. Eligibility requirements will vary by program and lender, but as a rule of thumb, you can expect to need:

Program Type	Credit Score	DTI	Down Payment
Conventional Loans	620	50%	3% to 5%
FHA Loans	580	56.9%	3.5%
VA Loans	580-620	41% to 50%	0%
USDA Loans	640	44%	0%

FHA Loans

FHA loans are insured by the Federal Housing Administration and are aimed at borrowers who may not be able to qualify for an affordable mortgage through conventional lenders.

While FHA interest rates are often lower than conventional, all FHA loans come with an upfront mortgage insurance premium of 1.75% – due at closing – and anongoing annual MIP that’s equal to 0.55% of the loan balance for most borrowers. Although conventional PMI is cancellable once a homeowner reaches 20% equity, FHA MIP typically persists for the life of the loan.

FHA lenders generally have less restrictive eligibility requirements, with companies accepting borrowers with credit scores down to 580 with a 3.5% down payment. Buyers who have at least 10% down may be able to qualify with a score of 500.

The FHA also allows a higher debt-to-income ratio, with many lenders allowing DTIs up to 56.9%. In practice, this can mean greater purchasing power for FHA borrowers compared to buying with a conventional mortgage.

You can only use an FHA mortgage to purchase property you plan to occupy as your primary residence, althoughmultifamily properties are eligible so long as you live in one of the units for a minimum of one full year.

VA Loans

VA loans are backed by the US Department of Veterans Affairs and are available to current and past service members who qualify for a VA certificate of eligibility. In most cases, VA borrowers with full entitlement can finance up to 100% of their purchase price, meaning buying a home with no down payment and an interest ratelower than conventional alternatives may be possible.

There is no ongoing mortgage insurance with VA loans. However, most borrowers will pay an upfront VA funding fee of either 2.15% or 3.3% on zero-down mortgages. Veterans with service-related disabilities may qualify for a funding fee waiver.

The VA does not set a minimum credit score or maximum DTI on the loans they back, with each lender free to set their own eligibility requirements. In general, however, you should expect credit score requirements ranging from 580 to 620 and to need a debt-to-income ratio between 41% and 50%.

Unlike conventional mortgages, VA loans generally have no maximum loan limit for borrowers with full entitlement, meaning the amount you can qualify for is based on your income, debt-to-income ratio, and repayment ability. However, borrowers with partial entitlement may face limits tied to conforming loan limits. Similar to FHA loans, VA mortgages are available only for primary residences and cannot be used to purchase second homes or investment properties.

USDA Loans

USDA loans are a lower-cost mortgage option insured by the United States Department of Agriculture for homebuyers planning to purchase residential property in eligible USDA-designated rural communities.

You can obtain a USDA mortgage for up to 100% of your home’s purchase price. In some cases, you may be able to include your closing costs into your loan for a zero-out-of-pocket buying experience.

Similar to the VA, the USDA does not set a required credit score for its loans. However, many lenders look for a score of at least 640, which is the minimum required to qualify through the USDA’s automated underwriting system. DTI requirements for USDA loans typically range from 41% to 44%.

USDA loans haveincome limits which are determined by your location and household size.

Like other types of government-backed mortgages, USDA loans are only available for properties you plan to occupy as your primary residence. However, USDA guidelines restrict purchases to single-family homes, although properties with an accessory dwelling unit that does not generate income may still qualify.

How Much Can You Afford?

While loan limits set a maximum amount on how much conventional borrowers can finance, most applicants will have a lower borrowing limit determined by their income level and other existing debts.

Lenders calculate this personal loan limit as a function of your DTI and estimated monthly mortgage payments.

For example, a borrower applying for a conventional loan with a lender following a 50% maximum DTI could have monthly debt obligations – including their mortgage payment – that total 50% of their qualifying income.

In addition to this total DTI limit, some lenders may have a front-end DTI that limits housing expenses to a set portion of income. For example, a lender allowing a 50% total DTI may only allow mortgage costs to take up 43% of your qualifying earnings.

Since various factors – including interest rates, taxes, mortgage insurance, and PMI costs – can impact your monthly payment,true purchasing power will vary from borrower to borrower and lender to lender, even with the same DTI limits and income.

What to Do Next

The MRC conventional mortgage calculator can provide a rough estimate of how much your monthly payments will be with a conventional loan. But everyone's financial situation is different, and there is no surefire way to know your actual purchasing power and anticipated mortgage payments without discussing your individual borrowing needs with a licensed mortgage professional.

To see what kind of monthly payments you can expect with a conventional loan – or with other types of comparable mortgage alternatives – apply with a qualified lender today.