Balloon Payment Calculator
Calculate the lump-sum balloon payment due on a loan, based on the monthly payment and the remaining balance at the balloon date.
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%
years
The term the monthly payment is calculated over
years
Years until the remaining balance is due in full
Results
Balloon Payment Due
$271,248.73
Regular Monthly Payment
$1,896.20
Total Paid Before Balloon
$159,281.14
How the Balloon Payment Calculator Works
A balloon loan calculates monthly payments as if the loan will fully amortize over a long term (like 30 years), but requires the entire remaining balance to be paid off in a single lump sum much sooner (like 7 years). Enter the loan amount, annual interest rate, the full amortization term used to calculate the monthly payment, and the earlier balloon due date, and this calculator finds the monthly payment and the remaining balance due at the balloon date.
where P is the loan amount, r is the monthly interest rate, and n is the number of payments over the full amortization term. The balloon payment is the remaining loan balance after k payments (where k is the balloon term in months), found by projecting the loan balance forward using the same monthly payment.
Example
A $300,000 loan at 6.5% annual interest, amortized over 30 years but with a 7-year balloon, has a monthly payment of about $1,896. After 7 years (84 payments) of paying down that loan, the remaining balloon payment due is roughly $271,000 — most of the original balance, since amortization is slow in the early years of a long-term loan.
Common Use Cases
- Evaluating a commercial mortgage or business loan with a balloon structure.
- Planning ahead for refinancing or a sale before the balloon payment comes due.
- Comparing a balloon loan's lower monthly payments against its lump-sum risk.
- Understanding how much equity or savings you'll need by the balloon date.
FAQs
Why would anyone take a loan with a balloon payment?
Balloon loans often have lower monthly payments than a fully amortizing loan of the same shorter term, since payments are calculated as if spread over a much longer period. Borrowers who expect to sell, refinance, or come into a lump sum of cash before the balloon date sometimes use this structure to reduce payments in the meantime.
What happens if I can't pay the balloon payment?
You'd typically need to refinance the remaining balance into a new loan, sell the underlying asset, or pay it off from savings. Failing to do any of these by the due date can put you in default, so it's important to plan for the balloon payment well in advance.
Why is the balloon payment so much higher than the loan amount decreased?
Amortizing loans pay mostly interest in the early years and increasingly more principal later on, so a loan calculated over a long term (like 30 years) still has most of its original balance remaining after just a few years of payments — which is exactly what makes the balloon payment so large.