Balloon Payment Calculator — Balloon Mortgage
A balloon loan has lower monthly payments based on a long amortization schedule, but the remaining balance becomes due in full at the end of a shorter balloon term. Enter the loan amount, interest rate, amortization period, and balloon term to see the monthly payment, the balloon lump sum, and total interest paid.
%
years
years
Lump-sum balance owed at the end of the balloon term
- 1
Monthly interest rate (r)
5.5% ÷ 12 ÷ 100 = 0.004583 - 2
Monthly payment
200,000 × 0.004583 × 5.1874 ÷ (5.1874 − 1) = 1,135.58Sized on the full amortization schedule, not the shorter balloon term. - 3
Balloon growth factor (1+r)ᴮ
1.004583ᴮ = 1.4683 - 4
Balloon payment due
200,000 × 1.4683 − 1,135.58 × (1.4683 − 1) ÷ 0.004583 = 177,631.77
How does this calculator work?
Monthly payment is calculated on the full amortization period (e.g. 30 years), but the remaining balance is due in full at the balloon date (e.g. 7 years). Balloon balance = P(1+r)^B − PMT × ((1+r)^B − 1)/r. Plan to refinance or sell before maturity — if rates rise, the balloon becomes expensive to roll over.
Formula
How this is calculated
A balloon mortgage uses a long amortization schedule (typically 30 years) to compute affordable monthly payments, but the loan actually matures much sooner — commonly 5–10 years. At that maturity date, the remaining unpaid principal is due as a single large "balloon" payment. The monthly payment is identical to what a full 30-year loan would require, but very little principal is paid off in the early years, so the balloon balance is usually close to the original loan amount.
The formula for the remaining balance after B payments is the present value of the remaining N − B scheduled payments: P × (1+r)^B − PMT × ((1+r)^B − 1) / r, where r is the monthly interest rate. Borrowers typically plan to refinance before the balloon comes due, sell the property, or make a lump-sum payoff from savings or an investment.
Balloon mortgages often carry a slightly lower interest rate than fixed 30-year loans, making the initial monthly payment attractive. The risk is that when the balloon comes due, interest rates may be higher, refinancing may be difficult, or property values may have fallen below the outstanding balance. This calculator assumes fixed payments throughout the balloon term and no penalties for holding to balloon maturity.
Frequently asked questions
If you cannot pay the balloon and cannot refinance, the lender may foreclose. Most borrowers plan ahead by refinancing before maturity, making extra principal payments to reduce the balloon, or ensuring liquid savings cover the lump sum. Always have a clear exit strategy before choosing a balloon loan.
A regular fully-amortizing mortgage has equal payments that retire the full balance over the term — no lump sum is ever due. A balloon loan uses payments sized for a longer amortization period, leaving a large remaining balance at the actual maturity date. Monthly payments are lower, but the balloon risk is shifted to the borrower.
Balloon mortgages can work well if you plan to sell or refinance before the balloon date and if the lower rate saves meaningful money in the short term. They carry more risk than fixed-rate loans because your ability to refinance at balloon maturity depends on interest rates and creditworthiness at that future date.
Also known as
TG we-Calculate Editorial Team. (2026). Balloon Payment Calculator — Balloon Mortgage [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/balloon-payment-calculator
TG we-Calculate Editorial Team. "Balloon Payment Calculator — Balloon Mortgage." TG we-Calculate. 2026. https://we-calculate.com/calculator/balloon-payment-calculator.
TG we-Calculate Editorial Team, "Balloon Payment Calculator — Balloon Mortgage," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/balloon-payment-calculator
@misc{wecalculate_balloon_payment_calculator, title = {Balloon Payment Calculator — Balloon Mortgage}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/balloon-payment-calculator}}, year = {2026}, note = {TG we-Calculate} }
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