To calculate interest for home purchase commercial loans, use the simple interest formula: Interest = Principal × Annual Interest Rate × (Days in Term/365). Commercial loans often include variable rates tied to benchmarks like SOFR or LIBOR, with points (1-3% of principal) and fees added upfront. For FHA loans, interest is calculated similarly but with fixed rates (typically 3-8% annually). Monthly payments include principal, interest, and FHA’s MIP (0.5%-1.5% of the loan amount, split into upfront and annual premiums).

Commercial loans rely on variable or fixed rates based on market conditions, while FHA loans use fixed rates with mandatory insurance. According to the Federal Reserve, average commercial loan rates were 5.8% in Q3 2023, compared to FHA’s 6.3% (U.S. Department of Housing and Urban Development, 2023). Points and fees in commercial loans can add 2-5% to closing costs, whereas FHA MIP increases total borrowing costs by 0.5-1.5% over the loan term. For example, a $500,000 commercial loan at 6% over 20 years incurs $1,095 monthly payments (excluding fees), while an FHA loan with 6.5% interest and 1% MIP would cost $1,243 monthly (CFPB, 2022). These differences reflect risk-based pricing and regulatory requirements, ensuring lenders cover default risks and operational costs.