Balloon Payment Calculator
A balloon loan keeps each payment low by amortizing over a long schedule, then leaves one large lump sum due when a shorter term ends. Enter the price, an optional down payment and fee, the rate, the amortization length, and the balloon term to see the periodic payment, the balloon owed, and the full cost.
Formula
Worked example
On a $250,000 price with no down payment at 6.5% amortized over 30 years (N = 360 monthly payments), the monthly payment is about $1,580. After a 7-year balloon term (n = 84 payments), the remaining balance, the balloon due, is roughly $226,000.
How a balloon loan is structured
A balloon loan splits the difference between affordability and payoff speed. The payment is calculated as if the loan will be repaid over a long amortization schedule, commonly 30 years, which keeps it low. But the contract actually matures after a much shorter balloon term, often five or seven years. At that point every dollar of principal you have not yet paid down comes due in a single lump sum called the balloon payment. This calculator first nets out any down payment and optional origination fee to find the amount financed, then sizes the payment and projects the balance forward to the balloon date.
Down payment, fees, and payment frequency
A larger down payment lowers the amount financed, which shrinks both the payment and the balloon. An origination fee can either be paid up front or rolled into the balance; rolling it in raises the financed amount and therefore the payment and balloon, so the calculator lets you model both. Payment frequency matters too: most balloon mortgages pay monthly, but commercial and equipment loans can pay quarterly, semi-annually, or annually. The annual rate is divided by the number of payments per year and the balance compounds on the same schedule, so changing the frequency changes the payment, the interest, and the balloon.
Why the balloon is so large
Early in any amortized loan, most of each payment goes toward interest rather than principal. Because the payment is sized for a long schedule, only a small slice of the balance is retired during a short balloon term. The remaining balance is the future value of the financed amount minus the accumulated value of the payments made, which this calculator computes exactly. On many loans the balloon still equals the bulk of what you originally financed.
Planning for the lump sum and the total cost
The total cost figure adds up everything you hand over: the down payment, any up-front fee, all the regular payments, and the balloon itself, so you can compare the real price of a low payment against a fully amortizing loan. A balloon payment is a real obligation, and missing it can mean default or foreclosure. Borrowers typically refinance into a new loan, sell the underlying asset, or save aggressively to cover the balloon before it arrives. These figures are estimates based on the inputs you provide; your actual contract terms, fees, and rate resets may differ, so confirm the numbers with your lender or a financial professional before committing.
Balloon term vs. balloon owed
| Balloon term | Approx. monthly payment | Approx. balloon due |
|---|---|---|
| 3 years | $1,580 | $241,000 |
| 5 years | $1,580 | $234,000 |
| 7 years | $1,580 | $226,000 |
| 10 years | $1,580 | $211,900 |
On a $250,000 loan at 6.5% amortized over 30 years (monthly), the balloon shrinks as the term lengthens.
Frequently asked questions
What is a balloon payment?
It is a large, one-time lump sum that pays off the entire remaining balance of a loan when its term ends. The regular payments only cover interest plus a small amount of principal, so most of the amount financed is still owed at the balloon date.
How is the balloon amount calculated?
The payment is amortized over the long schedule, then the calculator projects the balance forward by the number of payments in the balloon term. The balloon equals the financed amount grown at the periodic rate minus the accumulated value of the payments already made.
Does a down payment or origination fee change the balloon?
Yes. A down payment lowers the amount financed, which reduces both the payment and the balloon. An origination fee rolled into the loan raises the financed amount and so increases both; paid up front it does not, but it still adds to your total cost. The calculator models all three.
What happens if I cannot pay the balloon?
You generally must refinance into a new loan, sell the asset to pay off the balance, or use savings. Failing to cover the balloon can trigger default or foreclosure, so most borrowers plan their exit well before the term ends.