Balloon Loan Calculator
Calculate the low monthly payment and the large balloon balance due at the end of a balloon loan that is amortized over a longer term.
Independently verified for accuracy
Calculator by Toolsloft ↗- Monthly payment
- 1199.1
- Balloon payment
- 179278.77
- Total paid
- 280003.26
- Total interest
- 80003.26
A balloon loan keeps your monthly payment low by setting it as if the loan ran for a long amortization term, then requires the entire remaining balance to be paid in one large lump sum on an earlier date. This calculator shows that low monthly payment and the size of the balloon you would owe at the end. Use it to see the trade-off before taking on a balloon mortgage or commercial loan.
How this is calculated
The monthly payment is set as if the loan amortized over the longer term, using the standard amortizing-loan payment formula. After the shorter balloon term, the loan is paid off early with a single balloon payment equal to the remaining balance, computed from the standard balance formula: balance = amount*(1+r)^k - payment*((1+r)^k - 1)/r, where r is the monthly rate and k is the number of payments made. At a 0% rate the balance is the amount minus the payments made.
How to use
- Enter the loan amount and annual interest rate.
- Enter the amortization term in months that sets the monthly payment.
- Enter the balloon term in months, when the remaining balance comes due.
- Read the monthly payment, the balloon payment, the total paid, and the total interest.
Examples
- $200k at 6%, 360 mo amortization, 84 mo balloon:
payment $1,199.10/mo, balloon $179,278.77 - 0% example:
$12k, 60 mo amortization, 36 mo balloon → balloon $4,800
FAQ
- What is a balloon payment?
- A balloon payment is a single large payment that pays off the entire remaining balance of a loan at the end of a shorter term. Until then you make smaller regular payments, so the balance is still large when the balloon comes due.
- Why is the balloon payment so large?
- The monthly payment is calculated as if the loan ran for the full amortization term, so only a small part of the principal is repaid during the shorter balloon term. Most of the original balance, plus the interest that accrued, remains and is due all at once as the balloon.
- How do people handle the balloon when it comes due?
- Borrowers usually refinance into a new loan, sell the property, or pay the balance in cash. There is risk if rates rise or the asset loses value, since refinancing may cost more or be unavailable.