🎈 Balloon Payment Calculator
Calculate balloon loan payments
Full amortization period
When balloon payment is due
How to Use This Calculator
Enter Loan Details
Input the loan amount, annual interest rate, total loan term (full amortization period), and balloon payment term (when the balloon payment is due).
Understand the Terms
The total loan term is the full amortization period (e.g., 30 years), while the balloon term is when the large final payment is due (e.g., 5 years). Monthly payments are calculated as if the loan were fully amortized over the total term.
Review Results
See your monthly payment amount and the balloon payment due at the end of the balloon term. Plan for how you'll handle the balloon payment (refinancing, selling, or paying in full).
Formula
Monthly Payment = P × [r(1 + r)ⁿ] / [(1 + r)ⁿ - 1]
Balloon Payment = P × (1 + r)ᵇ - PMT × [((1 + r)ᵇ - 1) / r]
Where:
• P = Principal
• r = Monthly interest rate
• n = Total number of payments (full term)
• b = Number of payments before balloon (balloon term)
• PMT = Monthly payment
Example Calculation:
If loan is $200,000, rate 5%, total term 30 years, balloon in 5 years:
• Monthly payment (based on 30-year amortization): ~$1,074
• Balloon payment after 5 years: ~$176,299
• You pay $1,074/month for 5 years, then $176,299 lump sum
About Balloon Payment Calculator
A balloon payment calculator helps you understand balloon loans, which have lower monthly payments for a set period followed by a large lump-sum payment (balloon payment) at the end. Balloon loans are structured so that monthly payments are calculated as if the loan were fully amortized over a longer period (e.g., 30 years), but the loan requires a large final payment after a shorter period (e.g., 5 years). This calculator shows your monthly payment and the balloon payment amount you'll need to pay.
When to Use This Calculator
- Balloon Loan Evaluation: Understand balloon loan payment structure
- Payment Planning: Plan for monthly payments and balloon payment
- Refinancing Planning: Plan to refinance before balloon payment is due
- Loan Comparison: Compare balloon loans vs. traditional loans
Understanding Balloon Loans
- Lower Monthly Payments: Payments based on longer amortization period
- Large Final Payment: Significant lump sum due at balloon term
- Refinancing Risk: Must refinance or pay balloon payment when due
- Common Uses: Often used in commercial real estate and some mortgages
Why Use Our Calculator?
- ✅ Payment Planning: See exact monthly and balloon payments
- ✅ Risk Assessment: Understand the balloon payment requirement
- ✅ Accurate Calculations: Proper balloon payment formulas
- ✅ Planning Tool: Plan for refinancing or balloon payment
- ✅ 100% Free: No registration or payment required
Important Considerations
- Balloon Payment: Must have plan to pay large lump sum when due
- Refinancing: Many borrowers plan to refinance before balloon payment
- Risk: If you can't refinance or pay, you may lose the property
- Market Conditions: Refinancing depends on market conditions and your credit
Frequently Asked Questions
What is a balloon payment?
A balloon payment is a large lump-sum payment due at the end of a balloon loan. The loan has lower monthly payments during the loan term, but requires this large final payment. Monthly payments are calculated as if the loan were fully amortized over a longer period, but the loan term is shorter, leaving a large balance (balloon payment) to be paid.
Why would someone choose a balloon loan?
Balloon loans offer lower monthly payments, which can be attractive for borrowers who expect to refinance, sell the property, or have a large payment available when the balloon is due. They're often used when borrowers need lower payments now but expect better financial circumstances later.
What happens if I can't pay the balloon payment?
If you can't pay the balloon payment, you typically need to refinance the remaining balance. If you can't refinance (due to credit issues, market conditions, or property value), you may face foreclosure or loss of the property. It's crucial to have a plan for the balloon payment before taking a balloon loan.
Can I refinance a balloon loan before the balloon payment is due?
Yes, you can typically refinance a balloon loan before the balloon payment is due. Many borrowers plan to refinance into a traditional loan before the balloon payment comes due. However, refinancing depends on credit, property value, and market conditions, so it's not guaranteed.