Balloon Loan Calculator

On an amortizing balloon loan, your monthly payments are computed as if the loan would be repaid over the full amortization period — say 30 years — but the loan actually ends at the shorter loan term, say 7 years or 18 months. The balloon payment is simply whatever principal is still outstanding at that point. Because early payments are mostly interest, that remaining balance is usually a large share of the original loan. On an interest-only loan, the balloon is the whole amount borrowed, less anything you pay extra.

Because the monthly payment is sized to a much longer amortization schedule than the loan actually runs. You are paying as if you had decades to repay, so each payment retires very little principal. The unpaid remainder does not disappear — it comes due all at once as the balloon payment, which is the real cost of those lower monthly payments.

You have three realistic options: pay the balance in cash, refinance it into a new loan, or sell the asset and pay the loan off from the proceeds. The risk is that refinancing depends on rates, your credit, and the asset's value at that future date — none of which are guaranteed. Knowing the balloon amount years in advance, which this calculator shows you, is what makes the plan manageable. To see what refinancing it would cost each month, enter the balloon in the loan calculator.

Yes. Every extra payment goes straight to principal. On an amortizing loan, a smaller balance also accrues less interest each month afterward, so more of each regular payment goes to principal and the balloon falls by more than the sum of your extra payments. On an interest-only loan, the balloon falls by exactly what you pay extra, and the lower balance makes each later interest-only payment smaller. This calculator shows exactly how much your extra payments shrink the final balloon.

Each monthly payment covers only that month's interest, so the balance doesn't go down. Borrow $200,000 at 6% and you pay $1,000 a month, then owe the full $200,000 when the term ends, whether that is 18 months or 5 years away. The payment is lower than on an amortizing balloon loan (the same loan on a 30-year schedule costs $1,199.10 a month), but the balloon is larger. Choose Interest only under Payment Type to see your own numbers.

Balloon structures suit borrowers who genuinely expect a large sum before the term ends — a business anticipating revenue, an investor planning to sell the property, or someone confident they can refinance. They are risky as a way to simply stretch affordability, because if the exit plan falls through you owe a large payment you cannot make. Model the balloon amount honestly before committing.