Balloon Payment Calculator
Calculate the monthly payment and the lump-sum balloon due at the end of a balloon loan amortized over a longer schedule.
How it works
Monthly payment = amortized payment over the amortization term · Balloon = balance remaining after (due years × 12) payments · Balance = loan × (1+r)^k − payment × ((1+r)^k − 1) ÷ r
A balloon loan keeps monthly payments low by sizing them as if the loan would run for a long amortization schedule — say 30 years — but the entire remaining balance comes due as one lump sum much earlier, often after 5 or 7 years. That final “balloon” can be enormous because early payments are mostly interest, so little principal has been retired. Borrowers usually plan to refinance, sell, or pay the balloon in cash before it hits — a bet that carries real risk if rates rise or the property can’t be sold.
Worked example
On a $200,000 loan at 6% amortized over 30 years, the payment is about $1,199 a month. If the balloon is due after 7 years, you have paid roughly $100,700 in payments, but the remaining balance — the balloon — is still about $179,300, because most of those early payments went to interest.
Frequently asked questions
Why is the balloon payment so large?
Because the monthly payment is calculated on a long amortization schedule, only a small slice of each early payment reduces principal. After a few years most of the original balance is still outstanding, and that unpaid balance is what comes due all at once.
What happens if I can’t pay the balloon?
You typically must refinance into a new loan, sell the asset, or negotiate an extension. If none is possible the lender can foreclose or repossess, which is why balloon loans are riskier than fully amortizing loans and best suited to borrowers with a clear exit plan.
Where are balloon loans common?
They appear in commercial real estate, some seller-financed home deals, and certain auto and land loans. They can make sense when you know you will sell or refinance before the balloon, or expect a lump sum to cover it, but they are risky as a long-term hold.
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This is an educational estimate, not financial advice. Lenders use their own rounding, fees, mortgage-insurance rules and credit terms — confirm exact figures with your lender or a licensed advisor.