Electromagnetic modeling of finite structures and finite illumination for metrology and inspection are described herein. In one embodiment, a method for evaluating a diffracting structure involves providing a model of the diffracting structure. The method involves computing background electric or magnetic fields of an environment of the diffracting structure. The method involves computing scattered electric or magnetic fields from the diffracting structure using a scattered field formulation based on the computed background fields. The method further involves computing spectral information for the model of the diffracting structure based on the computed scattered fields, and comparing the computed spectral information for the model with measured spectral information for the diffracting structure. In response to a good model fit, the method involves determining a physical characteristic of the diffracting structure based on the model of the diffracting structure.