How a balloon loan works
The monthly payment is the standard amortizing payment over the full amortization period, at the note rate divided by 12. When the balloon falls due, you owe whatever principal is left, which is the present value of the payments you'd still have made.
Worked example
A $200,000 loan at 7%, amortized over 30 years with a balloon after 7, costs $1,330.60 a month. After 7 years you still owe a $182,294.83 balloon. You'll have paid $94,065.65 of interest and $294,065.65 in total.
A $100,000 loan with the balloon after 5 years leaves $94,131.59 to pay.
Planning for the balloon
The CFPB warns that balloon loans can be risky: you'll need to refinance, sell or pay cash when the balloon is due. Qualified Mortgages generally can't have balloon payments, except some made by small creditors in rural or underserved areas.
What this calculator assumes
A fixed note rate, on-time payments and no extra principal payments. Commercial and seller-financed balloon notes may charge interest only, which leaves the full principal as the balloon.
Borrowing in the UK?
The country choices above the inputs open separate local pages. UK balloon deals, like PCP car finance, fix the balloon amount at the start and quote an APR. Choosing United Kingdom opens that page and resets the inputs; amounts are not converted.
For the UK version, use the UK balloon loan calculator in pounds.
Inputs for the US balloon payment calculator
Loan amount
The amount borrowed in US dollars.
Interest rate
The yearly note rate, charged at one twelfth each month.
Amortization period
The term the payment is worked out over, often 30 years.
Balloon due after
When the remaining balance must be paid off.
CALCULATOR QUESTIONS
US balloon payment calculator questions
How do you calculate a balloon payment?
Work out the payment over the full amortization, then find the balance left after the balloon year: the value today of the payments you wouldn't make.
What is a 30/7 balloon?
Payments as if over 30 years, with the remaining balance due after 7.
Are balloon mortgages legal?
Yes, but most can't be Qualified Mortgages, and lenders must disclose the balloon clearly.
How do I pay a balloon?
Usually by refinancing, selling the property or paying from savings. Start planning well before it's due.