Balloon Loan Calculator
Calculate the monthly payment and the lump-sum balloon balance due at the end of a balloon loan amortized over a longer schedule.
How to use this tool
- Enter the loan amount and interest rate.
- Enter the amortization schedule (the long period that sizes the payment).
- Enter the balloon term (when the balance comes due).
- Read the monthly payment and the balloon amount you must refinance or pay off.
Balloon loans offer low payments but demand a big lump sum at the end. Enter your loan, the amortization schedule, and the balloon term to see your monthly payment and exactly how large the final balloon payment will be.
Formula
Monthly payment M = P · r / (1 − (1 + r)−na), amortized over the longer schedule na = amortization years × 12.
Balloon balance after the term (nt = term years × 12 payments):
B = P · (1 + r)nt − M · ((1 + r)nt − 1) ÷ r
This is the remaining principal you must pay or refinance when the balloon comes due.
How it works
A balloon loan keeps payments low by amortizing them over a long schedule — say 30 years — but ends after a much shorter term, at which point the entire remaining balance is due in one lump sum called the balloon payment. The calculator computes the monthly payment from the long amortization schedule, then projects the balance forward to the balloon date using the standard remaining-balance formula.
Because early payments are mostly interest, the balance barely moves, so the balloon is often close to the original loan. Borrowers typically plan to refinance, sell, or pay the lump sum from savings before the balloon arrives; failing to do so risks default. This estimate assumes a fixed rate and excludes fees, taxes, and insurance. If the amortization schedule equals the term, the balloon is zero because the loan fully amortizes.
Reviewed by the AbraCalc Mortgage Desk. Educational estimate only, not financial advice; confirm the amortization basis, term, and any reset or refinance options in your loan documents.
Worked example
$200,000 at 6%, amortized over 30 years, 7-year balloon
- Monthly rate r = 6% ÷ 12 = 0.005; amortization n = 360 months.
- Monthly payment = 200,000 × 0.005 ÷ (1 − 1.005^−360) = $1,199.10.
- After 7 years, n_t = 84 payments.
- Balloon = 200,000 × 1.005^84 − 1,199.10 × (1.005^84 − 1) ÷ 0.005 = $179,278.77.
- Payments made before the balloon = 1,199.10 × 84 = $100,724.49.
Balloon due $179,278.77; monthly payment $1,199.10; paid before balloon $100,724.49
Balloon due on $200,000 at 6% (30-yr amortization) by term
| Balloon term | Monthly payment | Balloon due |
|---|---|---|
| 3 yrs | $1,199.10 | $192,168 |
| 5 yrs | $1,199.10 | $186,109 |
| 7 yrs | $1,199.10 | $179,279 |
| 10 yrs | $1,199.10 | $167,371 |
Key terms
- Balloon payment
- A large lump-sum payment of the remaining balance due at the end of a balloon loan's term.
- Amortization schedule
- The longer period used to size the monthly payment, even though the loan ends sooner.
- Balloon term
- The number of years until the remaining balance comes due in one payment.
- Remaining balance
- The principal still owed after a given number of payments, projected with the balance formula.
Frequently asked questions
- Why is the balloon payment so large?
- Payments are sized over a long amortization schedule, so early payments are mostly interest and the principal barely drops. When the short term ends, most of the original balance remains and is due at once.
- What happens if I can't pay the balloon?
- Borrowers usually refinance into a new loan, sell the asset, or pay the lump sum from savings. If none of those is possible, the loan can go into default, so plan an exit before the balloon date.
- How is the balloon balance calculated?
- Project the balance forward: B = P × (1+r)^n − M × ((1+r)^n − 1) ÷ r, where n is the number of payments made and M is the monthly payment from the amortization schedule.