A balloon loan usually has a smaller monthly payment for a fixed period, then a large “balloon payment” (the remaining balance) due at the end. Use this calculator to estimate your monthly payment, your balloon payment, and how much interest you pay before the balloon comes due.
Choose a balloon term (when the big payment happens) and an amortization term (the schedule your monthly payment is based on). Many balloon loans use a longer amortization term (like 30 years) with a shorter balloon term (like 5–7 years).
A balloon loan can look “cheap” because the periodic payment is often computed as if you had a long, fully-amortizing loan — but you do not make payments long enough to reach a zero balance. That leftover balance becomes your balloon payment.
The heart of the math is the standard amortizing-payment formula. When payments are monthly, the payment is:
Payment = P × r × (1 + r)n ÷ ((1 + r)n − 1)
Notice what’s sneaky here: n is based on the amortization term, not the balloon term. That’s why a balloon loan payment can be much lower than a short-term fully amortizing loan.
If APR is 6.75% and you pay monthly, the periodic rate is: r = 0.0675 ÷ 12 = 0.005625. For bi-weekly and weekly schedules, we divide by 26 or 52 instead.
Let’s say you borrow $250,000 at 6.75% with a 30-year amortization term. That’s n = 30 × 12 = 360 payments. Plug those into the formula and you get the periodic payment. This payment is the same style you’d see on a normal mortgage… but then you stop early.
Each payment splits into interest and principal. For a given period: Interest = Balance × r. The rest of the payment reduces principal: Principal = Payment − Interest. After principal is paid, the new balance is: New Balance = Old Balance − Principal.
We repeat that process for the number of payments in the balloon term (for example, 5 years monthly = 60 payments). After the final payment before the balloon is due, the remaining balance is your balloon payment.
If you add an extra amount each period, you reduce the balance faster, which reduces the balloon payment. This calculator applies the extra amount directly to principal after interest is paid each period. Even $50–$200 extra per month can noticeably shrink the balloon, depending on rate and term.
Important: Some real loans have prepayment penalties, minimum interest rules, or different rounding. Use this as a planning tool, then verify with your lender.
Here’s a common structure: $250,000 loan, 6.75% APR, 30-year amortization, but a 5-year balloon. Your payment is calculated like a 30-year loan, but at year 5 you owe a big remaining balance.
In the early years of any amortized loan, a larger chunk of each payment goes to interest. Because balloon loans end early, you don’t get as many later years where principal paydown speeds up. That’s one reason balloon balances can stay surprisingly large.
Balloon loans are all about tradeoffs. To compare options, focus on four numbers: payment, balloon, interest paid, and your plan at the balloon date. A low payment can be great — but only if the balloon is realistic for you.
If the payment stretches your budget, the balloon doesn’t matter — because you might not reach it. Compare against your income and other debt using a Debt-to-Income Ratio Calculator.
Treat the balloon as a deadline with a price tag. Ask: “Could I refinance this amount if rates are higher?” and “If I had to sell, is the asset liquid enough?”
Some borrowers focus on payment and forget total interest. This calculator shows interest paid up to the balloon. If you plan to refinance, your total cost may include both loan periods, fees, and possibly a different rate.
Run scenarios: add 1–2% to the APR, reduce your balloon term, or remove extra payments. If the numbers still look manageable, that’s a good sign.
Not necessarily. An interest-only loan pays only interest for a set time, then usually converts to amortizing payments. A balloon loan has a scheduled balloon payment — but it might still amortize during the term. You can model interest-only structures with the Interest-Only Loan Calculator.
Because the periodic payment is often based on a long amortization (like 30 years), but you stop after a short balloon term (like 5 years). You simply haven’t made enough payments to reach zero balance.
Yes. Extra payments reduce principal faster, which lowers the remaining balance at the balloon date. This is one of the easiest ways to “buy down” the balloon while keeping the same loan structure.
Often yes — but it depends on interest rates, your credit, income, property value (if secured), and lender rules. Refinancing is not guaranteed. Use this calculator to understand the size of the balance you’d need to refinance.
That becomes a serious problem: you could default, face fees, or lose the collateral if it’s a secured loan. If you choose a balloon loan, your plan for the balloon date should be realistic and conservative.
It’s mathematically accurate for a standard amortizing payment model with optional extra principal. Real loans may have fees, escrow, compounding differences, and rounding rules. Always confirm with your lender.
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MaximCalculator provides simple, user-friendly tools. Always treat results as educational estimates and double-check important numbers with a professional or your loan documents.