Balloon Payment Calculator

Model loans and mortgages with a final balloon payment. See your monthly payment, balloon amount, total interest, and full amortization schedule.

$
%
years

Time until the balloon is due.

years

Used to compute the monthly payment (e.g., 30 years for a 7-year balloon mortgage).

%

Target balloon equal to this percentage of the original principal.

Balloon loan summary

Regular payment
$0.00
Amount due each period until the balloon date.
Balloon payment
$0.00
Lump sum due at the end of the term.
Total of payments (including balloon)
$0.00
Total interest paid
$0.00
Effective APR (approx.)
0.00%
Internal rate of return of all payments.
Number of regular payments
0

Amortization schedule

Scroll to see how each payment is split between interest and principal, and how the remaining balance evolves until the balloon payment.

# Payment Interest Principal Balloon Balance
Run a calculation to see the amortization schedule.

What is a balloon payment loan?

A balloon loan is a loan where you make regular payments for a short term, but the payments are not large enough to fully pay off the loan. At the end of the term, you owe a large lump sum called the balloon payment.

Balloon structures are common in mortgages, auto loans, and business loans where the borrower expects to sell, refinance, or receive a lump sum before the balloon is due.

How this balloon payment calculator works

This tool is more flexible than most bank calculators because it lets you:

  • Choose a different amortization period than the actual loan term.
  • Define the balloon as a percentage of the original loan or as a fixed dollar amount.
  • Change the payment frequency (monthly, bi-weekly, weekly, quarterly).
  • Use different compounding frequencies for interest.
  • View and export a full amortization schedule to CSV.

Step 1 – Effective periodic interest rate

If the nominal annual interest rate is \( r_{\text{nom}} \), compounded \( m \) times per year, the effective rate per compounding period is:

\( i_c = \dfrac{r_{\text{nom}}}{m} \)

If payments are made \( p \) times per year, we convert to an effective payment-period rate:

\( i = \left(1 + \dfrac{r_{\text{nom}}}{m}\right)^{\frac{m}{p}} - 1 \)

Step 2 – Payment based on amortization period

Let:

  • \( P \) = loan amount (principal)
  • \( i \) = interest rate per payment period
  • \( N_a \) = number of payments in the amortization period (e.g., 30 years × 12 months = 360)

The fully amortizing payment is:

\( \text{PMT} = P \cdot \dfrac{i}{1 - (1 + i)^{-N_a}} \)

In a balloon loan, you only make payments for \( N_t \) periods (the actual term), where \( N_t = \text{loan term years} \times p \). The remaining balance after \( N_t \) payments becomes the balloon.

Step 3 – Remaining balance and balloon amount

The remaining balance after \( k \) payments on a level-payment loan is:

\( B_k = P(1 + i)^k - \text{PMT} \cdot \dfrac{(1 + i)^k - 1}{i} \)

For a balloon loan, the balloon payment is simply \( B_{N_t} \).

Pros and cons of balloon loans

Advantages

  • Lower regular payments compared to a fully amortizing loan of the same term.
  • Can help with cash flow in the early years.
  • Useful if you plan to sell or refinance before the balloon date.

Risks

  • You must be able to pay or refinance the balloon when it is due.
  • If interest rates rise or property values fall, refinancing may be difficult.
  • Missing the balloon payment can lead to default or foreclosure.

Tips for using the balloon payment calculator

  • Try different amortization periods (e.g., 15 vs 30 years) to see how they change your payment and balloon.
  • Use the balloon % tab to match lender-offered structures (e.g., 50% balloon car loan).
  • Use the balloon amount tab if you know how much you can pay at the end (e.g., expected bonus or sale proceeds).
  • Check the total interest and effective APR to compare with standard loans.

Frequently asked questions

Is the balloon payment always equal to the remaining balance?

In a standard balloon loan, yes. The balloon is the remaining principal after all scheduled regular payments. Some contracts may include fees or interest adjustments, so always read your loan documents.

Can I pay extra toward principal before the balloon?

Many loans allow prepayments, which reduce the remaining balance and therefore the balloon amount. However, some loans have prepayment penalties. Check your agreement or ask your lender.

How do balloon loans compare to interest-only loans?

In an interest-only loan, you pay only interest during the term and the entire principal is due as a balloon. In a typical balloon loan, each payment includes some principal, so the balloon is smaller than the original loan.