Balloon Payment Calculator
Calculate monthly payments and final balloon payment for balloon loans and mortgages
Loan Specifications
Total amount borrowed
Annual percentage rate
Period for calculating monthly payments
When balloon payment is due
How often payments are made
Balloon Loan Results
Payment Details
Total Cost Analysis
Payment Summary
You will make 60 payments of $1550.60 each, then a final balloon payment of $172513.25 after 5 years.
Total amount paid: $265549.12($65549.12 in interest over the loan term).
Payment Schedule Preview (First 12 Months)
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $1550.60 | $383.93 | $1166.67 | $199616.07 |
| 2 | $1550.60 | $386.17 | $1164.43 | $199229.90 |
| 3 | $1550.60 | $388.42 | $1162.17 | $198841.47 |
| 4 | $1550.60 | $390.69 | $1159.91 | $198450.79 |
| 5 | $1550.60 | $392.97 | $1157.63 | $198057.82 |
| 6 | $1550.60 | $395.26 | $1155.34 | $197662.56 |
| 7 | $1550.60 | $397.57 | $1153.03 | $197264.99 |
| 8 | $1550.60 | $399.89 | $1150.71 | $196865.10 |
| 9 | $1550.60 | $402.22 | $1148.38 | $196462.89 |
| 10 | $1550.60 | $404.56 | $1146.03 | $196058.32 |
| 11 | $1550.60 | $406.92 | $1143.67 | $195651.40 |
| 12 | $1550.60 | $409.30 | $1141.30 | $195242.10 |
| 60 | $172513.25 | $172513.25 | $0.00 | $0.00 |
* Final payment includes the balloon payment to clear remaining balance
Example Calculation
Balloon Mortgage Example
Scenario: Jack wants to buy a $100,000 house but plans to move in 5 years
Loan Amount: $100,000
Interest Rate: 7% annually
Amortization Period: 30 years (for payment calculation)
Balloon Payment After: 5 years
Calculation Results
Monthly Payment: $665.30
Total of 60 Payments: $39,918
Balloon Payment: $94,131.59
Total Paid: $134,049.59
Balloon Loan Pros & Cons
Pros
Lower monthly payments
Easier qualification
Short-term flexibility
Good for business investments
Cons
Large final payment required
Refinancing risk
Interest rate risk
Limited equity building
Important Considerations
Plan for balloon payment well in advance
Consider refinancing options before due date
Common in commercial real estate
Amortization period affects monthly payment
Ensure you can afford the balloon payment
Consider market conditions at payment time
Understanding Balloon Payments
What is a Balloon Payment?
A balloon payment is a large, lump-sum payment made at the end of a loan term. Balloon loans feature lower monthly payments during the loan term, but require a substantial final payment to pay off the remaining principal balance.
How Balloon Loans Work
Monthly payments are calculated using a longer amortization period (typically 20-30 years), but the loan term is much shorter (typically 3-7 years). At the end of the term, the remaining balance becomes due as a balloon payment.
Common Uses
- •Commercial Real Estate: Property investments and business expansion
- •Short-term Ownership: When you plan to sell before balloon payment
- •Bridge Financing: Temporary financing until long-term solution
Calculation Formulas
Monthly Payment Formula
Pmt = (A × i × (1 + i)^n) / ((1 + i)^n - 1)
Balloon Payment Formula
B = A × (1 + i)^nb - (Pmt / i) × ((1 + i)^nb - 1)
A: Loan amount
i: Periodic interest rate (annual rate ÷ payments per year)
n: Total number of payments in amortization period
nb: Number of payments until balloon payment
Pmt: Monthly payment amount
B: Balloon payment amount
Important: Always have a plan for the balloon payment before taking the loan.