Balloon Payment Calculator
- Principal in payments
- Interest
- Balloon
Plan how you'll cover the $182,294.83 balloon: savings, a sale, or a refinance at whatever rate applies then.
How the balloon payment calculation works
The payment is set on a long amortization
A $200,000 loan at 7% amortized over 30 years has a payment of $1,330.60 a month, the same as a regular 30-year loan.
The loan comes due much earlier
If the balloon is due after 7 years, you make 84 payments totalling $111,770.82. Only $17,705.17 of that reduces the balance; $94,065.65 is interest.
Whatever is left is the balloon
Balance = loan × (1 + r)^k − payment × ((1 + r)^k − 1) ÷ r, with r the monthly rate and k the payments made. Here that leaves $182,294.83 due at once.
Interest-only payments leave the full loan
With interest-only payments of $1,166.67, nothing is repaid, so the balloon is the full $200,000.
Worked example. A $200,000 balloon loan at 7%, with payments based on 30 years and the balloon due after 7, costs $1,330.60 a month. After 84 payments you have paid $94,065.65 in interest and $17,705.17 of principal, and a balloon of $182,294.83 is due.
Balloon Payment FAQ
What is a balloon payment?
A balloon payment is the large lump sum due at the end of a loan whose regular payments don't pay it off in full. In the default example it is $182,294.83, more than 90% of the $200,000 borrowed.
How is a balloon payment calculated?
Work out the payment on the full amortization, then find the balance still owed after the payments made before the due date. That remaining balance is the balloon.
What is a balloon loan?
A loan whose payments don't fully repay it by the end of the term, so a large lump sum is due at the end. They're common in commercial real estate, equipment and some auto financing.
Why would a business choose a balloon loan?
The monthly payment is lower than on a loan paid off over the same short term. The catch is that you need to refinance, sell or have cash ready when the balloon comes due.
What happens if I can't pay the balloon?
You'll need to refinance, extend the loan with the lender's agreement, or sell the asset. If none of those works the loan is in default, so start planning well before the due date.
Does this work for a balloon mortgage?
Yes. Enter the mortgage amount and rate, the amortization (often 30 years) and the year the balloon is due. A $300,000 mortgage at 6.5% amortized over 30 years with a 5-year balloon costs $1,896.20 a month and leaves $280,832.93 due after 60 payments. For home loans, a balloon payment generally keeps the loan from being a Qualified Mortgage under Regulation Z; the exception in 12 CFR 1026.43(f) applies only to certain creditors and needs, among other conditions, a term of at least five years, payments amortized over no more than 30 years and a rate that doesn't rise.
Can I see an amortization schedule with a balloon payment?
Yes. Use the amortization schedule calculator with the amortization years; the balance shown at the end of your balloon year is the balloon amount.