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Balloon loan - a whimsical name don't you think for a potentially risky financial product?

What is a balloon loan?

Wikipedia defines a balloon loan or mortgage as a loan "which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size."

This Balloon Loan Calculator will not only calculate the final balloon payment, it will also help you structure a loan to meet your exact needs.

Check out these additional loan scenarios:

  • Want to know what periodic payment will result in a specific final balloon amount? This calculator will calculate the regular payment.
  • Or do you need to set the regular payment to an agreed upon, but nontraditional amount before calculating the balloon? This calculator is capable of doing that calculation as well.
  • Or do you have a budget for both the periodic payment and the balloon payment and you want to know how much you can borrow? This calculator can use your inputs to calculate the loan amount.
  • Or do you want to calculate the periodic payment using say a 30-year term while the balloon is computed using a 7-year term? Yup, you can do that calculation too. See "Doing the Two-Step" below
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Using the Balloon Loan Calculator

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As mentioned, a balloon loan is a loan that has its regular periodic payment calculated using one term (say 30 years) when the last payment is due sooner (say in 7 years).

If you do not know the amount of the regular loan payment, then we must calculate it before we can calculate the final balloon amount.

Example: Assume you are considering a mortgage for $146,500. You want the monthly payment calculated based on a 30-year loan, but you'll pay the balance after 72 months.

Doing the Two-Step

Step 1: Enter:

Amount of Loan?: $145,500.00
Annual Rate?: 4.5000%
Balloon Due at Payment? (#): 360
Periodic Payment?: $0.00
Final/Balloon Payment (can be 0)?: $0.00

When you enter "0" for both "Periodic Payment" and "Final/Balloon Payment," you are setting up the calculator to calculate a level payment for the entire term of the loan. That is the final payment will not be a balloon payment.

Click "Calc" and here are the results. $737 is the "regular" payment amount for a 30-year loan. (The final payment gets rounded by less than $2.00 or less than $0.01 per each regular payment.)

Periodic Payment?: $737.23
Final/Balloon Payment (can be 0)?: $735.27

Step 2: Now to calculate the balloon payment amount, with the balloon due after six years, set the calculator as follows:

Amount of Loan?: $145,500.00
Annual Rate?: 4.5000%
Balloon Due at Payment? (#): 72
Periodic Payment?: $737.23
Final/Balloon Payment (can be 0)?: $0.00

Click "Calc," and this is the balloon that will be due in the final month of the sixth year if the debtor makes payments based on an assumed term of 30 years:

Final/Balloon Payment (can be 0)?: $130,433.50
Amortization schedule
Amortization schedule showing final balloon payment.

If that's what you wanted to know - what the balloon payment amount will be for a loan, then you're finished.

But with this calculator, it's possible to do more. You can structure a loan, just the way you want it.

Other scenarios - very flexible!

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Example 2: Pick the balloon payment amount and calculate the periodic payment:

Amount of Loan?: $145,500.00
Annual Rate?: 4.5000%
Balloon Due at Payment? (#): 72
Periodic Payment?: $0.00
Final/Balloon Payment (can be 0)?: $100,000.00

Result:

Periodic Payment?: $1,110.73

Example 3: Pick any periodic payment amount:

Amount of Loan?: $145,500.00
Annual Rate?: 4.5000%
Balloon Due at Payment? (#): 72
Periodic Payment?: $2,000.00
Final/Balloon Payment (can be 0)?: $0.00

Result:

Final/Balloon Payment (can be 0)?: $27,541.94

Example 4: Pick your payments and see what you can borrow:

Amount of Loan?: $0.00
Annual Rate?: 4.5000%
Balloon Due at Payment? (#): 72
Periodic Payment?: $1,000.00
Final/Balloon Payment (can be 0)?: $50,000.00

Result:

Amount of Loan?: $84,794.97

Balloon Amortization Schedule with Extra Payments

The calculator's support for extra payment is very flexible. First, you'll notice the calculator prompts you for "Extra Payments Start?" date. You can, therefore, schedule extra payments between the regular due dates if doing so is better for your cash flow.

As mentioned elsewhere, the calculator allows for a one-time extra payment or for multiple extra payments. The multiple extra payments can be for 2 or any number up until the loan is paid-in-full. (In that case, set the number of extra payments to "Unknown.")

When the extra payments are "off-schedule," the calculator prepares an expanded amortization schedule, showing the payment being applied 100% to the principal with interest accruing.

Balloon loan schedule with interest only payments and a lump sum extra payment
Balloon loan schedule with interest only payments and a lump sum extra payment.
Note how the interest-only payment drops from $545 to $526 after the extra payment.

This is the correct way to apply the payment - something that other online calculators don't usually handle properly. That is if they even let you plan for extra payments between regular payments.

The Interest-Only Payment Method is a Special Case

Most frequently, the periodic payments get allocated to both principal and interest. Thus with each payment, the loan balance is being reduced.

But what if the borrower wants to pay even less per period?

If that's the case, the lender may agree to make the balloon loan one where the borrower pays only the interest due on each payment date. Paying only the interest each period reduces the payment amount even more for the borrower.

Interest-only option selected for the regular periodic payments
Interest-only option selected for the regular periodic payments

This calculator supports interest-only payments (select the option under "Amortization Method"). If you select it, however, the calculator works slightly differently.

  • First, the balloon payment will always be equal to the loan amount. Therefore, it isn't possible to solve for the balloon payment.
  • Or looked at in a different way, the user cannot provide a periodic payment amount. The calculator will always calculate the regular payment amount since it is the interest due.
  • When introducing extra payments into the interest-only cash flow, the calculator's main window shows the amount of the first interest-only payment. But after each prepaid principal amount, the subsequent payments will be reduced since prepaying lowers the loan balance which, of course, reduces the interest due.

Given the above, if you select interest only, in almost all cases, to use the calculator, you'll want to set both of these inputs to 0.

Periodic Payment?: $0.00
Final/Balloon Payment (can be 0)?: $0.00

Charts

As the day winds down, I go cross-eyed looking at columns of numbers. That's where cash flow charts come in handy. You can quickly learn the relationship between the principal, interest and optional extra payments.

This calculator creates 3 charts.

Balloon payment chart
Chart depicting regular periodic cash flow with a large final balloon payment.
  • The annual chart compares total interest and principal paid each year.
  • The accumulated chart shows the amounts allocated to the principal and interest since the start of the loan.
  • The pie chart clearly shows the relationship between total interest and principal with calculated percentages.

Bloggers, feel free to use these charts to make your point. Click for several export options.

Should I take out a balloon loan? There's Risk!

Balloon loans have their advantages. The borrower gets to borrow a large amount, for a short period, while making relatively small periodic payments.

However, the borrower should only consider this loan type if they are confident that they'll have the funds available or that they'll be able to refinance the loan in time to make the balloon payment when it comes due. Otherwise, the borrower will most certainly default on the terms of the loan, and they risk ruining their credit rating.

You can leave your comments and questions below.

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70 Comments on “Balloon Payment Calculator”

financial online calculator Join the conversation. Tell me what you think.
    • Not sure if you’re just telling me how you are using this calculator, or if you have a question how to calculate what you need? This calculator will handle that calculation. If you need to know how, please give me some example numbers and I’ll explain how it’s done.

      • Hi there!!

        The loan amount is $120,813.87 with interest of 7% starting 12/28. First payment 1/28 payable monthly until 10 years. Fully amortized over 20 years.

        • Okay, that’s helpful.

          Since the payment amount for a 20 year amortization is currently not known, you’ll have to do this calculation in 2 steps.

          Step 1:

          1. Set "amount of loan" to $120,813.87
          2. Set "annual rate" to 7%
          3. Set "balloon due at payment #" to 240 (since we need to know the payment amount for a 20 year monthly loan)
          4. Set "periodic payment" to "0", since this is an unknown value.
          5. And another step that is not obvious, set the "final balloon payment" to 0.01. (We want the balance to be 0 after 20 years, but 0 tells the calculator to calculate the amount, so we have to fudge with a 1 cent balance πŸ™‚ )
          6. Leave the other settings as they are.
          7. Calculate. The 20 year payment will be $938.47.

          Step 2:

          1. Leave the first 2 inputs as they are after the above calculation.
          2. Change the "balloon due at payment #" to 120.
          3. Leave "periodic payment" set to the prior calculated result
          4. Set "final balloon payment" to "0".
          5. Now calculate again.
          6. You are ready to view your schedule with a balloon at 10 years.

          If you want a balloon schedule where you have control over the dates, you can use this amortization schedule, or this loan calculator or this financial calculator. For the 1st two calculator, enter the values as calculated and they will create a schedule with the dates you set. For the last calculator, scroll down the page to the tutorials.

          πŸ™‚

    • With this balloon calculator, you can’t. However, this amortization schedule will create a balloon payment schedule and you can set both the loan date and first payment date. To use for a balloon schedule, enter all 4 values (loan amount, number of payments [payment number balloon is due], interest rate and normal payment amount) and calculator will show final balloon payment.

      If you don’t know all 4 values, then solve for the one unknown, and then rerun setting the number of periods to when the balloon is due. If you have any questions, just ask.

      • I’m trying to figure a monthly payment on a mortgage with yearly balloon payments. This would be a 30 year but rather than $140,000 due at the end it’s $5000 yearly starting in year 2-29.
        I don’t want it to reflect an earlier payoff, I want it to lower the monthly payment over the full 360 months accounting for that $140,000.

        Thanks

        • You’ll need to use this financial calculator.

          Scroll down the page to the list of tutorials and check out #1 for an overview of how the calculator works. Basically, you’ll enter rows for the number of unknown monthly payments followed by rows of the $5,000.

          Please ask if you have any questions. The calculator will do what you need.

  • We have financed a balloon loan for a 10 year and set it up on a 15 year note. How do you figure the interest paid and final payment if the borrowers pay monthly 2,000 and the. monthly payment is 1595.95. Loan amount 180,830.00 at 6%.

    • If they paid $2,000 monthly, then don’t use $1,595.95 as the payment, use $2,000. The calculator will accept anything for the payment amount that you enter. You’ll want to set the balloon payment to unknown and let the calculator calculate it, using the $2,000 payment.

      Does that answer your question?

      You might want to also check out this financial calculator. It lets the user enter payment as they are made on the date they are made. If you go to this calculator’s page, scroll down to the tutorials. #25 deals specifically with tracking loan payments.

  • – Loan amount $116,000
    – Loan term 72 months
    – Monthly payment $1,400
    – #1 Ballon payment at 5% in 3 years
    – #2 Balloon payment at 7% in 6 years

    Please tell me how to calculate it in your calculator..???

    • This calculator won’t allow for an interest rate change. However, the Ultimate Financial Calculator will support adjustable rates.

      Once on that page scroll down to the tutorials. There are 2 tutorials about balloon payments and at least one about adjust rates.

      If after looking at those (and the first one for a general overview about the calculator) and if you still have a question, then please ask it on that page.

  • I am trying to use the balloon payment schedule and to print it out. When I push ” print ” nothing happens. I am using an iPad with Hammermill print over wifi.
    Thanks

    • I’m sorry you are having problems printing. However, I just confirmed that I can print from Google Chrome on a desktop as well as from Safari using my iPhone X. So I don’t think there is anything wrong on my side, though there may be a specific problem with iPads that I don’t know about.

      Can you print from another application? If not, perhaps the iPad needs to be rebooted?

  • Hello – thank you for this calculator it is very helpful. Can you tell me how i could possibly add another extra payment? I originally paid an extra 1,000 per month towards principal for 6 months and then i changed that to 2,000 extra towards principal.

    • You’re welcome.

      You can’t do that with the balloon calculator, but you can do that with the Ultimate Financial Calculator.

      When you go to the page, scroll down to the tutorials. There a couple about balloon payments and extra payments. (I would start with tutorial #1 to get an overview.)

      Basically, the UFC will allow users to do anything because you have complete control over interest rates, payment dates, and amounts.

  • Karl, your calculators have been enlessly useful to me. I am just paying off the baloon loan I modeled with your tools over 5 years ago.

    I wanted to take a moment to thank you for making them available.
    Chris

  • I need to calculate a loan with all interest due at the end of the term…no monthly payment.

    Amount = $50,000
    Interest Rate = 6%
    Compounding = Monthly
    Term = 5 years

    Thank you….

    • Just to make sure I understand, are you saying there will only be one payment?

      If so, I would use this loan calculator and set the loan date and the first payment date and number of period to 1.

      If I misunderstood, let me know. I’m sure there’s a calculator here somewhere that will do what you need. πŸ™‚

  • Hi
    For what I gathered you seemed to be very helpful.
    I need help calculating a loan from a Monthly Payment standpoint, and see how the amortized schedule looks like.

    For Example:
    Monthly Amount Payment (this is the amount I want the payment to be) $500
    Loan Amount $ 50,000
    Interest Rate (amortized): 6%.
    Loan Term: 20 Yrs

    Also, how would it work if I were to add a a ballon payment at year 7.

    Thank you :):)

    • Hello. Thanks for stopping by.

      Neither should be a problem. Since you were on the balloon calculator, let’s look at how to do the balloon loan first.

      Fill in the calculator this way:

      Amount of Loan?: $50,000.00
      Annual Rate?: 6.0000%
      Balloon Due at Payment? (#): 84
      Periodic Payment?: $500.00
      Final/Balloon Payment (can be 0)?: $0.00

      By entering a 0 for the final payment, you you are telling the calculator to solve for a balloon amount (at the end of year 7). If you meant at the beginning of year 7, just change the 84 to the period number you want the balloon due.

      For the loan amortization schedule without a balloon, you’ll need to use this loan calculator (if you try to use the balloon calculator for the normal loan [without balloon], you’ll get a too many unknown error).

      Enter the values this way:

      Loan Amount?: $50,000.00
      Number of Payments? (#): 0
      Annual Interest Rate?: 6.0000%
      Payment Amount?: $500.00

      Now I know you said the term is 20 years, or 240 months, but here’s the thing. If you want to pay $500/month, then the loan will be paid off way before you reach 20 years. So I’ve indicate entering 0 for "Number of Payments" so the calculator can calculate the term.

      You could enter 240 months and leave the payment amount at $500, but the what will happen is, the loan will be paid off, and the 500 a month will keep on reducing the balance below 0, and then at the 240 period, the lender will how the borrower a big refund. This is accurate, but probably not what you want :-).

      If you want to see what the payment would be and have a 20 year term, enter 240 for the number of payments and 0 for the payment amount.

      If you try this, I would be interested in hearing how you make out. If something not clear, please ask again.

  • Hi Calculator Guru,

    Are you available for hire? I need a spreadsheet to Calculate Balloon payments. I need it to show a 30 yr mortgage with a normal schedule then show a client how the payments and principals change if we add a Balloon payment in for 5 years or 10 years at the end of each of those years. I should be able to show an accelerated payment schedule where the loan is paid off in 10-12 years rather than the 30 years it started with. The balloon payment would be the same payment in all end of each year for 10 years. Is this something you can create for us? It could be called the Balloon accelerated payment schedule. Thank You JP

    • Hello, of course I can create it! πŸ™‚ The only thing is, this calculator meets all of your stated requirements. Why do you need a spreadsheet? (I just hate taking people’s money for no reason.) If you’re not sure how to do one of the calculations, just ask and give me some specific numbers you would like to see used. I’ll walk you through the steps.

      • Hi Karl,

        Thanks for the quick reply. WOW that’s Great news! I tried the calculator on this page but perhaps I’m just not knowledgeable enough to perform the calculation properly. Here’s the numbers I’m looking for. I need two versions of a mortgage to show clients. One is easy, a 30 year mortgage at 8.5% for a $200M mortgage, I have this one already. The second is the accelerated mortgage with a balloon payment towards the principle every “end of a the year” a balloon payment is made of $18M for the first 10 year period, so 10 of these payments over 10 years. I need to show what the new principle or remaining balance is each year, and what the ramifications are towards an early payoff if the monthly payment is fixed at the original monthly payment of $1,537,826.97. I think the loan could be paid off in 10-12 years rather than a 30 year period. No penalties or fees are added to the early payoff or balloon payments. I hope this makes sense. Thank you JP

      • Hi Karl, I retried the calculator and don’t get me wrong I love it. I just need to be clear there are 2 kind of payments the monthly mortgage at $1,537,826.97 and an additional $18M annually for up to 10 years. In your calculator I wasn’t able to configure it for both payments it seems to only give me the Balloon payments after reviewing the schedule sheet. So what was missing is the monthly mortgage needs to be added into the schedule. With just the Balloon payments the accelerated payments go to 8 years which is Great. However, now if we add the monthly into the formula which I don’t know how to do that in your calculator, then this monthly payment should change the pay off to perhaps 5-6 years max. What do you think can we do it in your calculator if not I’m still open to an Excel spreadsheet version and you fee for doing it. THANKS again. JP

        • Hi JP, yes, it can be done. But lets start with basics and so we don’t confuse each other, lets define some terms. Also, let’s not try to guess an answer – lets just get it calculated. As I understand it, you’ve been able to create the "normal" amortization schedule with this calculator the runs the full 30 years. Correct. Then the next thing I suggest is let’s work on adding the extra payments. Extra payments and a balloon payment are different things. From the point of view of this site, a loan may or may not have a balloon payment, but it it has a balloon payment, there will only be one. A balloon payment is the final payment and it is larger than the "normal", periodic payment.

          I’m not clear on what you mean by "the monthly mortgage needs to be added into the schedule." If you have a schedule, then you have the monthly mortgage payment, right?

          If you want an annual extra payment of $18 million made at the end of each year then click on the "Set Dates or Extra Payments" and set the below options:

          Extra Payment Amount?: $18,000,000.00
          Extra Payments Start?: 12/31/2019
          Extra Payment Frequency?: Annually
          Number of Extra Pmts? (#): Unknown

          You’ll make the above settings after you have the amortization schedule for the standard 30 year mortgage. The "Unknown" means the extra payments will be paid until the loan is paid off. Now you can compare the schedule to the 30 year.

          If you get this far, then we can talk a balloon payment too, if you want one.

          • Hi Karl, I just sent you an email with screen grabs and a pdf from your calculator showing the correct results, but I need a little extra for custom monthly payments let me know your thoughts. Emailing me is fine. Thanks JP

          • Hi JP, I saw your email. I understand that the extra payments will vary in amount. That’s still not a problem. You don’t need custom programming for that. Please see the Ultimate Financial Calculator on this site. It allows user to make payments or extra payments on any date, for any amount. If you try it, scroll down the page to the tutorials. There are 25 of them. Look at #1 for an overview and then there are 2 dealing with extra payment specifically.

  • Hello, i need to learn how ballon payment works. My boss gave me search job about this project. I need to make an algoritm about this. Will you help me please πŸ™‚

    • If you want to know how to use the calculator, I’ll answer those questions. I do not get involved with answering questions about the equations however – that’s much too involved.

  • Patricia Arteaga says:

    Hello,

    Bank of America approved us in 2014 for a long modification with a $100,000 balloon payment. Since then, they sold the mortgage to Carrington Financial. When I ask for a payoff amount since we are selling our home, there is no information on the 100K. What happened to it? I called BoA and they won’t give me the information since I am not their client any longer. Carrington tried to explain things but I just heard the word “amortization” and that I would only owe $1,000 after I pay off the loan. What??

    Thanks.

    • Is the loan payoff amount more than $100,000? If so, then that’s where the balloon is.

      I can’t really say much here because I don’t know the details, and details are always important.

      However, if you want to confirm the exact loan payoff amount you’re being told, and you have your complete payment history, then you can check the calculation using this loan payoff calculator.

      Whether or not there is a balloon payment isn’t the issue to me. The issue is, is the payoff amount correct. Determining that is basically taking the loan amount, setting the interest rate and deducting the payments made as of the particular date paid and calculating the balance. Something a loan payoff calculator will do for you.

Comments, suggestions & questions welcomed...

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