Balloon Loan Calculator United States
This balloon loan calculator estimates the monthly payment and the lump-sum balloon due on a loan amortized over a longer term.
What it does
The Balloon Loan Calculator estimates the monthly payment on a loan amortized over a long schedule and the lump-sum balloon payment due when the shorter term ends.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
Payment = P × i / (1 − (1 + i)^−n); balloon = P(1 + i)^k − payment × ((1 + i)^k − 1) / i
How it works
It computes the fully amortizing payment for the amortization term, then finds the loan balance remaining after the balloon-term payments — that balance is the balloon due.
Where it is used
- Estimating the payment and balloon on a balloon mortgage
- Comparing a balloon loan with a standard amortizing loan
- Planning for the lump sum due at the end of the term
Worked example
A $200,000.00 loan at 6% amortized over 30 years pays … a month, then a … balloon falls due after 7 years.
What the balloon loan calculator does
The balloon loan calculator estimates the monthly payment during the term and the lump-sum balloon payment due at the end. You enter the loan amount, the annual interest rate, the amortization term used to size the payment, and the shorter balloon term after which the remaining balance is due. The tool returns the monthly payment, the balloon amount, the total of the monthly payments, the total paid over the balloon term, the total interest, and the principal repaid before the balloon.
A balloon loan’s monthly payment is calculated as if the loan ran for a long schedule, which keeps the payment low, but the whole outstanding balance becomes due years earlier. The balloon can be a very large sum, so look at both numbers before taking on this kind of financing.
How the calculation works
- First it finds the monthly payment: the fully amortizing payment that would repay the loan over the full amortization term at the monthly interest rate.
- Then it finds the balloon: the balance still owed after the payments made during the balloon term.
As formulas, the monthly payment is P × i ÷ (1 − (1 + i)^−n), where P is the loan amount, i is the monthly rate, and n is the number of months in the amortization term. The balloon after k months is P(1 + i)^k − payment × ((1 + i)^k − 1) ÷ i. At a zero interest rate, the payment is the loan divided by the number of months, and the balloon is the principal not yet paid.
Why the balloon is usually large
Early payments on an amortizing loan are mostly interest. A balloon loan ends after only a few years of that schedule, so little principal has been repaid when the balloon comes due, and on a long amortization term at a normal rate the balloon is often close to the original loan amount. You get a lower monthly payment than a short amortizing loan, in exchange for pushing most of the principal to one future date. Check the balloon figure against what you could realistically pay or refinance.
Who uses balloon loans
Balloon structures are common in commercial real estate, where an owner expects to sell or refinance before the balloon is due. They also appear in some seller-financed home sales, short-term business loans and certain auto financing. In each case the borrower is relying on a future event (a sale, a refinance or higher income) to provide the cash for the balloon.
That works when the event is reliable and the plan is clear. It is risky when the plan depends on things the borrower cannot control, such as future interest rates or property values, because a balloon loan gives no cushion if those turn against you when the balloon is due.
Reading your result
The monthly payment is what you budget for during the term, and the balloon is the sum you must cover at the end. The monthly payments plus the balloon give the total paid over the balloon term, and subtracting the loan amount gives the total interest. The principal paid before the balloon shows how little of the loan is repaid during the term.
Compare the result with a conventional amortizing loan, which repays principal across the full term with no balloon but has a higher monthly payment. The better choice depends on your cash flow and how confident you are in your plan for the balloon.
What you need to enter
Enter the loan amount, the annual interest rate, the amortization term that sets the payment, and the balloon term after which the lump sum is due. If the balloon term equals the amortization term, there is no balloon and the loan is a standard amortizing loan. Rerun the numbers if your quoted rate or your expected exit date changes.
This is general information only and not financial advice.
About This Balloon Loan Calculator
Use this balloon loan calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Frequently asked questions
What is a balloon loan?
How is the monthly payment calculated?
How is the balloon payment calculated?
Why choose a balloon loan?
What happens if I cannot pay the balloon?
Is my data private?
About the author
