Balloon Payment Calculator
Calculates the monthly payment and the lump-sum balloon payment due at the end of a balloon loan. Enter the loan amount, rate, amortization period and balloon term — or solve backwards for the payment needed to hit a balloon amount you choose.
Calculate Your Balloon Loan Payment and Balloon Amount
Balloon Loan Formula
Where:
- \(P\) — loan amount (the principal borrowed)
- \(r\) — monthly interest rate: APR ÷ 12
- \(N\) — amortization period in months (30 years = 360)
- \(n\) — number of monthly payments until the balloon comes due (7 years = 84)
- \(pmt\) — monthly principal-and-interest payment
- \(B\) — balloon payment: the balance still owed at month \(n\)\)
The first formula is the standard amortizing payment computed as if the loan ran the full \(N\) months. The second formula rolls the principal forward with compound interest for \(n\) months, subtracts the payments you made together with the interest they earned, and whatever is left is the balloon due at the end. For interest-only loans, \(pmt = P \cdot r\) and the balloon equals the original loan amount.
Balloon Loan – Calculation Example
Example: a $300,000 balloon loan at 6.5% APR, with payments amortized over 30 years (360 months) and the balloon due after 7 years (84 months).
\[ r = \frac{0.065}{12} = 0.0054167 \]
\[ pmt = 300000 \cdot \frac{0.0054167(1.0054167)^{360}}{(1.0054167)^{360}-1} \approx 1896.20 \]
\[ B = 300000(1.0054167)^{84} - 1896.20 \cdot \frac{(1.0054167)^{84}-1}{0.0054167} \approx 271249 \]
Result: a monthly payment of about $1,896.20 and a balloon payment of about $271,249 due after the 84th monthly payment — roughly 90% of the original loan. Total interest accrued to that point is about $130,530, and total cash including the balloon is about $430,530. You can reproduce all of these figures with the calculator's default values.
How to use the calculator
- Pick a Mode: "Calculate payment and balloon" computes both from your loan terms; "Find payment for a target balloon" works backwards from the balloon amount you want.
- Enter the Loan amount (the principal) and the Interest rate (APR).
- Fill in the Amortization period — the payment is calculated as if the loan fully paid off over this span (a 30/15 structure uses 30) — and the Balloon due after term in years; 0.25 years means 3 months.
- Choose a Payment structure: fully amortizing, interest-only, or a fixed monthly payment of your own. If you pick "Fixed monthly payment", enter the amount in the field that appears.
- In reverse mode, enter your Desired balloon amount and the calculator solves for the monthly payment that leaves exactly that balance.
- Read the Monthly payment, Balloon payment, Total interest until the balloon and Total paid, plus a year-by-year schedule showing principal and interest paid and the ending balance of each year.
What a balloon loan is — and how to read the result
A balloon loan charges small regular payments calculated as if the loan ran for decades, but a large lump sum — the balloon — comes due much earlier. The classic residential example is a "30/15" mortgage: payments based on a 30-year schedule, with the remaining balance due after 15 years. The structure you just calculated, 30-year payments with a 7-year balloon, works the same way. Balloon terms are also common in commercial mortgages, construction loans and some auto and personal loans.
Borrowers choose balloon loans for the low monthly payment. In the example above, about 86% of each early payment is pure interest, leaving the balloon at roughly 90% of the original principal. That is normal: in the first years of a long amortization almost nothing goes to principal, so the balance barely moves. If cash flow is tight today but you expect to sell the property, refinance, or have higher income later, the trade-off can be worth it.
The risk is concentrated in the balloon itself. When it comes due you must pay it in cash, refinance the remaining balance, or sell the asset — and none of those options is guaranteed to be available on the day, at a rate you like, or at a price you need. A larger balloon relative to the loan amount means more of the risk is deferred, not reduced.
Interpreting the schedule: each row shows how much of each year's payments actually reduced the balance. If the payment is set below the monthly interest (easy to do with the "Fixed monthly payment" option), the balance grows every month — negative amortization — and the calculator warns you. Interest-only payments keep the balance flat, so the balloon always equals the original loan amount. If your payment is large enough that the loan pays off before the balloon date, the schedule will say so — no balloon remains.
Assumptions, limitations and practical tips
- Monthly compounding at the entered APR, one payment per month on the same day, no extra payments, no fees. Taxes, insurance and closing costs are excluded, so a real mortgage payment will be higher than the P&I shown here.
- The balloon is quoted as the principal remaining after the last regular payment. Some lenders quote the balloon together with that final scheduled payment or roll it into one payoff figure — always confirm how your lender defines it.
- Plan the exit early. If refinancing is your strategy, start a few months before the balloon date, and check that the payment on a full amortizing loan fits your debt-to-income ratio — lenders will.
- Equity is your safety net. The difference between the property's value and the balloon determines whether refinancing is even possible; a home equity calculation shows where you stand, and remember that refinancing brings closing costs again.
- Shrink the balloon deliberately. Extra principal payments compound in your favor over the balloon term. Model them with the mortgage payoff calculator to see how much a modest extra amount each month removes from the balloon.
Frequently Asked Questions
How do I calculate a balloon payment by hand?
First compute the fully amortizing payment with \( pmt = P \cdot \frac{r(1+r)^{N}}{(1+r)^{N}-1} \), where \(r\) is the monthly rate (APR ÷ 12) and \(N\) is the full amortization in months. Then find the balance after \(n\) months: \( B = P(1+r)^{n} - pmt \cdot \frac{(1+r)^{n}-1}{r} \). For a shortcut, a loan amortization balance table for month \(n\) gives the same figure. Always subtract one month of payments if your lender quotes the balloon before the last payment.
What percentage of the loan is a typical balloon payment?
For short balloon terms on long amortizations, expect a very large balloon: a 30-year schedule with a 7-year balloon leaves roughly 85–92% of the original principal still due, because early payments are almost entirely interest. A 30/15 mortgage leaves around 70–80%. The rule of thumb: the shorter the balloon term relative to the amortization period, the closer the balloon stays to the full loan amount. There is no "normal" balloon size — it depends entirely on your two timeframes.
Is a balloon payment a good or bad idea?
It is a tool, not inherently good or bad. The upside is lower monthly payments, which fits borrowers who expect to sell the asset, refinance before the balloon, or earn much more later. The downside is concentrated risk: when the balloon hits, you must pay cash, refinance, or sell, and none of these is guaranteed — rates may be higher or your property value lower. If your income is uncertain or you plan to keep the asset long-term, a fully amortizing loan is usually safer.
Can I pay off a balloon payment early or make extra payments?
Yes in most cases — extra principal payments directly shrink the balloon, since every dollar of principal removed stops accruing interest for the rest of the term. Even $200 extra per month can cut tens of thousands off a balloon. Check your note for prepayment penalties first, common on some commercial and auto balloon loans. You can model the effect of extra payments with a mortgage payoff calculator applied to the same terms.
What happens if I can't pay the balloon payment when it's due?
Options depend on your lender: refinance the remaining balance into a new loan, sell the asset, negotiate an extension, or — if the note allows — convert the balloon into an amortizing loan at the current rate. Missing the balloon is a default, which can trigger foreclosure or repossession, so act months in advance. Regulators also require some lenders on owner-occupied mortgages to offer refinancing options if you qualify. Contact your servicer early, before the due date passes.
How is a balloon loan different from an interest-only loan?
An interest-only loan keeps the balance flat for a set period, then typically converts to full amortization afterward — the large payments come gradually. A balloon loan amortizes as if it runs decades, but the entire remaining balance hits you at the balloon date. Interest-only on a balloon structure means the balloon equals the full original principal. Both share low early payments; the difference is whether the big obligation lands at one moment (balloon) or phases in (interest-only conversion).
Does the balloon include the last monthly payment?
In this calculator the balloon is the principal balance remaining after the final regular payment, quoted separately — so your last month's payment is still due on top of it in practice. Real lenders differ: some quote a single "payoff figure" combining the final payment plus the balloon, others add accrued per-diem interest. Before the due date, request a formal payoff statement from your lender, since the exact amount depends on the payment date and their conventions.