Balloon Payment Calculator
Work out the monthly payment and the final balloon payment on a balloon loan, with total interest and a year-by-year balance, for mortgages, business and car loans.
Results
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Balance by year
| Year | Paid this year | Interest this year | Balance at year end |
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Quick Answer
A balloon loan has payments set as if it ran for a long term, but the rest is due as one lump sum much sooner. A $300,000 loan at 7%, with payments based on 30 years and a balloon after 7 years, costs $1,995.91 a month. After 7 years you still owe a balloon payment of $273,442.24.
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Table of Contents
- Balloon Payment Calculator
- Quick Answer
- Related Calculators
- How This Balloon Payment Calculator Works
- How to Use the Balloon Payment Calculator
- Core Formulas
- Key Terms
- Worked Example
- Real-Life Examples
- Balloon Loan vs Fully Amortizing Loan
- Balloon per $100,000 (30-Year Amortization)
- Risks of Balloon Loans
- Planning for the Balloon
- Common Mistakes to Avoid
- Frequently Asked Questions
- References & Sources
How This Balloon Payment Calculator Works
Enter the loan amount, the interest rate, the amortization period that sets your monthly payment, and when the balloon is due. The calculator works out the regular payment as if the loan ran the full amortization period, then finds the balance still owed on the balloon date. It also shows total interest and the balance at the end of each year.
Quick explanation: a balloon loan keeps payments low, then asks for the rest all at once.
- Monthly payment: based on a long schedule, such as 30 years.
- Balloon: the balance left when the shorter term ends, such as after 7 years.
- Plan ahead: most people sell, refinance or save to pay the balloon.
How to Use the Balloon Payment Calculator
- Enter the loan amount and interest rate.
- Enter the amortization period used to set the payment.
- Enter when the balloon is due.
- Press Calculate.
- Read the monthly payment, the balloon and the yearly balances.
Core Formulas
- Monthly payment: M = L × r ÷ (1 − (1 + r)^−N)
- Balloon payment: B = L × (1 + r)^k − M × ((1 + r)^k − 1) ÷ r
- Total interest: M × k + B − L
L is the loan, r the monthly rate, N the number of months in the amortization period and k the number of months until the balloon is due.
Key Terms
- Balloon payment: a large, one-time payment at the end of the loan term.
- Amortization period: the length of time used to work out the monthly payment.
- Balloon term: how long until the balloon is due.
- Refinancing: replacing a loan with a new one, often to pay off a balloon.
- Principal: the amount borrowed that is still owed.
Worked Example
A small business borrows $50,000 at 8%. Payments are based on 15 years, with a balloon after 5 years.
- Monthly payment = $477.83
- Principal repaid in 5 years = $10,616.87
- Balloon payment = $39,383.13, about 79% of the original loan
- Total interest over 5 years = $18,052.69
Real-Life Examples
- Mortgages: $300,000 at 7% on a 30/7 balloon is $1,995.91 a month, then a $273,442.24 balloon.
- Business loans: $50,000 at 8% on 15 years with a 5-year balloon leaves $39,383.13 to pay.
- Car loans: some lease-style car loans end with a balloon you can pay or refinance.
- Commercial property: many commercial mortgages run 5 to 10 years with a balloon.
Balloon Loan vs Fully Amortizing Loan
- Balloon loan: lower monthly payments, a large lump sum at the end, and refinancing risk.
- Fully amortizing loan: higher or equal payments, but the loan is paid off by the last one.
- Interest-only loan: instead of a lump sum, the payment jumps when principal repayments start.
Balloon per $100,000 (30-Year Amortization)
| Rate | Monthly payment | Balloon after 5 years | Balloon after 7 years | Balloon after 10 years |
|---|---|---|---|---|
| 5% | $536.82 | $91,828.73 | $87,945.02 | $81,342.06 |
| 6% | $599.55 | $93,054.36 | $89,639.39 | $83,685.72 |
| 7% | $665.30 | $94,131.59 | $91,147.41 | $85,812.38 |
| 8% | $733.76 | $95,069.86 | $92,477.43 | $87,724.70 |
| 9% | $804.62 | $95,880.14 | $93,640.46 | $89,429.74 |
Risks of Balloon Loans
- Refinancing risk: rates may be higher, or lenders may say no, when the balloon is due.
- Falling values: if the home or asset loses value, selling may not cover the balloon.
- Large lump sum: CFPB notes a balloon is generally more than twice the loan's average monthly payment, and often far more.
- Income changes: plans to pay from future income or a bonus can fall through.
Planning for the Balloon
Set a plan on the day you sign. Note the balloon date, then decide whether you will sell, refinance or pay from savings. If you plan to refinance, start talking to lenders at least six months before the date, and keep your credit in good shape.
Paying a little extra each month shrinks the balloon. Use the year-by-year table to see the balance at any point, then try a shorter amortization period to see how much a higher payment would cut the final amount. For a mortgage, check whether the loan lets you extend or reset the balloon, and what that would cost.
Common Mistakes to Avoid
- Ignoring the balloon. Plan for it from day one, not in the final year.
- Assuming you can refinance. Rates, credit and values may change.
- Comparing only payments. Check total interest and the lump sum too.
- Mixing up the two terms. The amortization period sets the payment; the balloon term sets the due date.
- Missing the due date. A missed balloon can lead to default or foreclosure.
Frequently Asked Questions
A large, one-time payment due at the end of a loan, covering the balance left after regular payments.
Work out the payment over the amortization period, then find the balance still owed when the balloon is due.
Payments are based on 30 years, but the rest is due after 7 years.
CFPB says they generally have shorter terms, often between 5 and 10 years.
Usually by refinancing, selling the property or using savings.
Balloon payments are not allowed in Qualified Mortgages, with some limited exceptions, according to the CFPB.
Usually yes. Extra principal payments lower the balance left at the end.
Talk to your lender early about refinancing or an extension. Missing it can lead to default.
The monthly payments are lower, but you still owe the rest, and refinancing has costs.
Yes. The balance falls in equal steps, and the balloon is what remains.
Some lenders offer them. Check the final payment and your options at the end.
No. It covers the loan payments only.
References & Sources
| Source | Used For | Link |
|---|---|---|
| Consumer Financial Protection Bureau, What is a balloon payment? | Definition of a balloon payment, typical terms and the Qualified Mortgage rule. | https://www.consumerfinance.gov/ask-cfpb/what-is-a-balloon-payment-when-is-one-allowed-en-104/ |