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Interest methods · actual/360

365/360 Loan Calculator for Commercial and Private-Lending Brokers

This calculator amortizes a loan under the 365/360 method, where the daily rate is the annual rate divided by 360 but charged for all 365 days. It returns the payment, total interest, total of payments, the effective annual rate and the extra interest compared with standard 30/360 accrual. It suits brokers who discuss commercial, construction or private notes.

Two notes at 7% can cost different amounts; this calculator shows the borrower where the gap comes from.

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Interest Methods & Tax

When does a borrower need to understand 365/360 interest?

Usually when they are reading a commercial term sheet, a private or portfolio note, or a construction loan and spot "interest calculated on an actual/360 basis". Most residential borrowers never see it, because typical US home loans accrue monthly on a 30/360 basis.

The borrower wants to know whether the clause matters. On an illustrative $1,000,000 loan at 7% amortized over 25 years, the monthly payment is about $7,130 under 365/360 versus about $7,068 under 30/360, roughly $62 more a month and around $18,600 over the full term. The effective annual rate rises from about 7.23% to about 7.33%. It is small per payment but real across a large balance.

Which loan officers and brokers should embed a 365/360 calculator?

Be honest about the audience: this is a niche tool. It earns a place on the site of a commercial mortgage broker, an originator who places investor or bridge loans with private lenders, or a team that regularly compares notes from portfolio lenders. On a pure first-time buyer site it would confuse more visitors than it helps.

Where it fits, it does a useful job. Borrowers comparing two term sheets often focus on the stated rate and miss the day-count clause. Sending them this calculator, and the 365/365 version for comparison, makes the difference concrete without a long email.

When the lead arrives you see the loan amount, rate, term, payment, effective annual rate and the extra interest versus 30/360. A large loan amount and a short term often signal a commercial or bridge scenario; ask about property type, intended hold period and whether the note carries a balloon payment, since this calculator assumes full amortization.

Use it as a conversation starter about total cost, then compare actual offers line by line, including fees, prepayment terms and the accrual method each lender uses.

What arrives in your CRM

What the numbers tell you about the borrower

  • Extra Interest vs 30/360If the borrower submitted after seeing a five-figure amount, they are reading term sheets closely and comparing lenders. Expect detailed questions and be ready to discuss accrual method alongside rate and fees.
  • Loan AmountBalances in the high six or seven figures usually indicate commercial, multifamily or investor financing rather than an owner-occupied home loan, which tells you which products and partners to bring into the conversation.
  • Loan Term (years)Short terms such as 5 or 10 years suggest the borrower expects a balloon or a refinance at maturity; the calculator assumes full amortization, so clarify the actual structure early.
  • Effective Annual RateBorrowers who focus on this result are comparing true cost rather than headline rate, which makes them receptive to an all-in comparison of competing offers.

A first message that uses their numbers

How should you follow up with a 365/360 lead?

Hi {first name}, thanks for running the 365/360 calculation on our site. The day-count method is one of several terms that change what a note really costs, along with fees, prepayment terms and any balloon. If you share the term sheets you're comparing, I can help you line them up side by side.

For business-purpose and commercial loans the disclosure rules differ from consumer mortgages, so confirm with your compliance team which requirements apply before quoting terms.

Where this calculator earns its place

  1. 01

    Commercial or investor loan page

    The audience that encounters actual/360 accrual is already there.

  2. 02

    Term sheet comparison email

    Lets a borrower see the effect of the day-count clause on their own loan amount.

  3. 03

    Resource page for private-lending or bridge loan clients

    Gives sophisticated borrowers a reference tool that keeps them coming back to your site.

Limits worth knowing

  • The model uses an average month of 365/12 days, so actual monthly interest on a real note will vary slightly with the days in each month.
  • It assumes full amortization; many commercial notes amortize over a longer schedule than their term and end in a balloon.
  • Fees, prepayment penalties and rate adjustments are not included.

Calculator disclaimer: Estimates only. The 365/360 method (common in commercial lending) charges a daily rate based on a 360-day year applied across 365 days, raising the effective cost above the nominal rate. This model uses an average month of 365/12 days. Confirm the exact accrual method with your lender.

Definitions in the calculator

365/360 method
An interest-accrual method that computes a daily rate by dividing the annual rate by 360, then charges it for every actual day of the year. The borrower pays 365 days of interest at a 360-day rate, so the true cost is about 1.4% higher than the stated rate — 6.5% nominal works out to about 6.59% simple. Common in commercial loans.
Day-count convention
The rule a loan uses to turn an annual rate into interest for a given period — which year length is the divisor and which days are counted. Common conventions are 30/360, actual/365 (365/365) and actual/360 (365/360). The same nominal rate produces different interest under each, so the convention belongs in any loan comparison.
Daily rate
The interest rate charged per day. Under 365/360 it is the annual rate divided by 360; at 6.5%, about 0.018056% a day. Multiplied by the balance and the days in the period, it gives the interest due. This calculator uses an average month of 365/12 days to convert it to a monthly rate.
Nominal interest rate
The stated annual rate in the loan documents, before accounting for the day-count method or compounding. Under 365/360, the rate actually earned by the lender is higher than the nominal rate. Two loans quoted at the same nominal rate can cost different amounts if they accrue interest differently.
Effective annual rate
The true yearly cost once the day-count premium and monthly compounding are included. For a 6.5% nominal rate under 365/360, this calculator shows about 6.793%, versus about 6.697% for the same rate charged as a simple monthly 1/12. It is the fairest single number for comparing loans that accrue differently.
30/360 method
A convention that treats every month as 30 days and the year as 360, so monthly interest is simply the annual rate divided by 12 — the standard for most U.S. residential mortgages. This calculator uses it as the baseline for “extra interest vs 30/360”. On $100,000 at 6.5% over 10 years, the 365/360 premium is about $552.
Amortization
Paying off a loan through equal scheduled payments that each cover that period’s interest plus part of the principal, so the balance reaches zero by the last payment. Under 365/360 each payment carries slightly more interest, so the level payment is higher than under 30/360 for the same nominal rate and term.
Balloon payment
A large lump sum due at maturity when a loan’s payments are based on a longer amortization than its actual term, a common structure in commercial lending where 365/360 is also typical. This calculator assumes full amortization over the term you enter, so it does not show a balloon balance.

Terms on this page

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FAQ · 8 questions

Questions about this calculator

What does 365/360 mean on a loan?

It means the lender divides the annual rate by 360 to get a daily rate, then charges that rate for every actual day of the year. You pay 365 days of interest at a 360-day rate, so the true cost is about 1.4% higher than the stated rate implies. At 7%, the daily rate is about 0.019444% instead of about 0.019178% under a 365-day year.

How much more does a 365/360 loan cost than a 30/360 loan?

It depends on the balance, rate and term. On $1,000,000 at 7% amortized over 25 years, the payment is about $7,130 versus about $7,068, roughly $62 more each month and around $18,600 over the full term. On smaller loans the difference is proportionally the same but smaller in dollars. Run your own loan amount, rate and term to see the figure for your note.

Why is the effective annual rate higher than the stated rate?

Two effects add up: the 365/360 day-count premium and monthly compounding. For a 6.5% note this calculator shows about 6.793% under 365/360, compared with about 6.697% for the same rate charged as a standard monthly loan. The second figure is higher than 6.5% only because of compounding; the extra above it comes from the day count.

Do residential mortgages use 365/360?

Most standard US residential mortgages accrue interest monthly on a 30/360 basis, which is why many homebuyers never encounter the term. It is common in commercial real estate, construction and some private or portfolio lending. Always check the note or term sheet to see which method applies. If a home loan does use it, the effect on payment and total interest is the same as shown here for any loan of that size.

Who should put a 365/360 calculator on their website?

Commercial mortgage brokers, originators who place investor or bridge loans, and teams that work with private lenders. If your business is mostly owner-occupied purchase loans, the tool will rarely be relevant and may distract visitors; a payment or affordability calculator is a better use of the space. Matching the tool to your audience keeps your site focused and your leads relevant.

What kind of lead comes from a 365/360 calculator?

Usually a borrower who is comparing specific offers and reading the fine print. These leads tend to be fewer in number but further along, often with a property and a lender already in view. Respond with a practical offer to compare term sheets, not a generic rate pitch. Ask for the documents they are comparing in your first reply.

Can I show the 365/360 and 365/365 calculators together?

Yes. A widget can place both, plus a standard loan calculator, as tabs or cards so a borrower can run the same loan under each method. Each submission records which calculator the borrower used, so you can tell which comparison prompted the inquiry. That makes it easy to present the day-count clause as one item in a broader, side-by-side comparison of offers rather than an isolated technical point.

Does the calculator handle balloon payments or interest-only periods?

No. It assumes the loan amortizes fully over the term you enter. For a note that amortizes over 25 years but matures in 10, run the 25-year amortization here to get the payment, then use the balloon mortgage calculator to estimate the balance due at maturity. Interest-only periods are covered by the interest-only mortgage calculator, which uses standard monthly accrual.

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