Balloon Loan Calculator
Small payments priced on a long schedule, then the entire remaining balance due at once. See both numbers — the gentle monthly payment and the balloon waiting at the end.
A small payment now, a wall of principal later
A balloon loan borrows the payment of a 30-year loan and the deadline of a 5-year one. The monthly number is seductive precisely because almost none of it retires principal — the balance at the balloon date is close to what you borrowed, and it is due in full, in one payment, on a date circled years in advance.
Balloon due = balance after k payments on the long amortization schedule
Example: $200,000 at 7%, payments on a 30-year schedule ($1,330.60), balloon at year 5: after 60 payments you have repaid barely $12,400 of principal. The balloon due is about $187,600 — 94% of the original loan, arriving at once.
The refinance assumption, examined
Most balloon borrowers plan to refinance at the wall. That plan depends on future rates, future income, future property values and future lending standards — four things outside the borrower's control, all needing to be fine on the same month. Lenders know this, which is why the rate looks kind at signing.
How this is calculated
The payment is the level payment for the full amortization period at the entered rate. The balloon is the amortization balance after (balloon years × 12) payments, computed by running the schedule month by month. Principal repaid by then is the original amount minus the balloon — usually the most sobering number on the page.
Frequently asked questions
What if I cannot pay or refinance the balloon?
Default — with the property or asset at stake. Some lenders offer extensions at a price. The time to negotiate that possibility is at signing, not at the wall.
Are balloon loans legal for homes?
For most US consumer mortgages, balloon structures are heavily restricted (ability-to-repay rules); they survive mainly in commercial, agricultural and some portfolio lending, and in seller financing.
Does making extra payments shrink the balloon?
Yes, one-for-one plus saved interest. Extra principal is unusually powerful here because the balloon is just the schedule's balance on a date — every dollar lowers it directly.
Why do sellers offer balloon financing?
Seller financing with a balloon lets a seller move a hard-to-finance property and earn interest, expecting the buyer to refinance with a bank once the property or the buyer's credit is seasoned.
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