Balloon Payment Calculator
Calculate regular payments on a balloon mortgage and the lump sum due at the end of the term.
Balloon loans offer low payments calculated over a long amortization schedule, but the entire remaining balance comes due as a lump sum years earlier. Enter the loan amount, rate, amortization term, and balloon term to see the monthly payment, the balloon amount due, and how much principal and interest you will have paid by then.
How to use this calculator
- Enter the loan amount and interest rate.
- Set the amortization term (the schedule payments are calculated on, often 30 years).
- Enter when the balloon comes due (must be shorter than the amortization term).
- Click Calculate to see the monthly payment, balloon lump sum, and principal vs interest paid.
The formula
Balloon = P(1+r)^k − pmt × ((1+r)^k − 1)/r, where k = payments made before the balloon date.
Worked example
A $200,000 loan at 6% amortized over 30 years has $1,199.10 monthly payments. With the balloon due in 5 years, the lump sum owed is $186,108.71 — after paying $71,946.06 total and repaying $13,891.29 of principal.
Frequently Asked Questions
What is a balloon mortgage?
A balloon mortgage calculates monthly payments as if the loan amortized over a long term, often 30 years, but requires the full remaining balance as a lump sum after a much shorter period, commonly 5 to 7 years. Borrowers typically plan to sell or refinance before the balloon date. The tradeoff is lower payments now against refinancing risk later.
What happens when the balloon payment comes due?
You must pay the entire remaining balance, refinance into a new loan, or sell the property. If interest rates have risen or your home has lost value, refinancing may be expensive or difficult. Never take a balloon loan without a realistic exit strategy for the due date.
Who uses balloon mortgages?
They are common in commercial real estate, for borrowers who expect a liquidity event like a business sale, and for buyers who plan to move within a few years and want the lowest possible payment meanwhile. Some seller-financed deals also use balloon structures. They are rarely the right choice for a long-term primary residence.
Balloon loan vs adjustable-rate mortgage: what is the difference?
A balloon loan ends with a mandatory lump sum payoff or refinance at a fixed date, while an adjustable-rate mortgage continues with a new rate after the fixed period and no lump sum. ARMs carry rate risk but not a forced payoff date. Compare the worst cases of each before choosing.
How is the balloon amount calculated?
The balloon equals the remaining loan balance after the scheduled payments through the balloon date: the original balance grown with interest minus the payments made. Because early payments are mostly interest, the balloon is usually close to the original loan amount — on a 30-year amortization with a 5-year balloon, often 90%+ of the original balance.