Balloon Loan Calculator
Calculate the low monthly payment and the large balloon balance due when a balloon loan comes due.
How it works
Monthly payment amortized over the long schedule · Balloon = balance × (1 + i)^k − payment × ((1 + i)^k − 1) ÷ i
A balloon loan sets its monthly payment on a long amortization schedule — say 30 years — but the whole remaining balance falls due much sooner, often in 5 to 7 years. That keeps the monthly payment low, but leaves a large lump-sum "balloon" that you must repay, refinance or roll over on the due date. It is common in commercial real estate and some auto and land loans.
Worked example
A $200,000 loan at 7%, amortized over 30 years, has a payment of about $1,330.60. If the balloon is due after 5 years, you have paid roughly $79,800 in installments but the balance is still about $188,300 — that is the balloon payment owed in full at year 5.
Frequently asked questions
Why is the balloon so large?
Because the low payment is based on a long schedule, early payments are mostly interest and barely dent the principal. After a few years most of the original balance is still outstanding, and that becomes the balloon.
What happens if I can’t pay the balloon?
You typically refinance it into a new loan, sell the asset, or negotiate an extension. The danger is that if rates have risen or your credit has slipped, refinancing may be costly or unavailable.
Who uses balloon loans?
Commercial real estate investors who plan to sell or refinance before the balloon, and some buyers who want low payments short-term. They trade lower monthly cost for a large obligation and refinancing risk down the road.
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This is an educational estimate, not financial advice. Lenders use their own rounding, fees and terms — confirm exact figures with your lender or a licensed advisor.