Find out exactly what your balloon payment will be. Enter your loan amount, interest rate, balloon term, and amortization period to see your monthly payment and the large final balance you'll owe when your balloon loan matures.
A homeowner borrows $200,000 at 6% with a 5-year balloon term and 30-year amortization (monthly payments).
Monthly Payment: $1,199.10 (based on the 30-year amortization)
Balloon Payment Due in Year 5: $186,108.71
Total Interest Over 5-Year Term: $58,054.78
The same loan fully amortized over just 5 years would require a $3,866.56 monthly payment. The balloon structure keeps payments low — but leaves a large balance to handle at year 5.
A car buyer finances $35,000 at 5.9% with a 3-year balloon term and 5-year amortization.
Monthly Payment: $675.02
Balloon Payment Due in Year 3: $15,245.92
Total Interest Over 3-Year Term: $4,546.71
Balloon auto loans are popular with buyers who plan to trade in or refinance before the balloon comes due. The lower monthly payment makes the car more affordable in the short term.
A business borrows $500,000 at 7.25% with a 10-year balloon term and 25-year amortization.
Monthly Payment: $3,614.03
Balloon Payment Due in Year 10: $395,901.11
Total Interest Over 10-Year Term: $329,585.23
Commercial balloon loans typically run 5–10 years with 20–30 year amortization. Borrowers usually refinance the balloon into a new loan when it matures.
A balloon loan is a loan where your monthly payments are calculated as if the loan would be repaid over a long period (the amortization period, often 30 years), but the entire remaining balance becomes due after a much shorter period (the balloon term, often 5–7 years). That final lump-sum balance is the balloon payment.
The large final lump-sum payment of the remaining principal balance, due at the end of the balloon term.
The short period (often 5–7 years) after which the remaining balance comes due in full.
The longer period (often 20–30 years) used to calculate your monthly payment amount. The loan is NOT fully paid by the end of this period in a balloon loan.
The risk that you cannot afford the balloon when it arrives — either because you can't refinance or the asset is worth less than the balance.
Decide in year one whether you'll refinance, sell, or pay the balloon. Waiting until the last year leaves you few options.
An extra $100 per month on our example loan shrinks the balloon from $186,109 to about $179,132 — and saves roughly $1,000 in interest.
Balloon loans often carry fixed rates for the term, but refinancing exposes you to then-current market rates. Compare offers early.
Read the promissory note carefully. Some balloon notes convert to a fully amortizing loan at the end, while others demand full repayment.
A balloon loan pairs a short loan term with a long amortization period. Your monthly payment is computed as if the loan would be paid off over, say, 30 years — which keeps the payment low — but the loan actually matures after just 5 to 10 years. At that point, the entire remaining principal balance comes due as one large balloon payment.
Balloon structures are common in auto loans (especially for buyers who trade in frequently), commercial real estate (where the property is typically refinanced or sold when the loan matures), and land loans (where the borrower plans to build or resell before the term ends). They also appear in some owner-financed home sales and business acquisition financing.
Lenders use balloon loans to limit their long-term interest-rate risk while still offering attractive monthly payments. The lender only commits to the rate for the short balloon term, yet the borrower enjoys a payment based on a much longer amortization. This combination is why balloon loans are so popular in commercial lending — the borrower gets lower monthly payments, and the lender gets a chance to re-price the loan at maturity.
Lower monthly payments on new cars. Buyers often trade in or refinance before the 2–4 year balloon comes due.
Typical 5–10 year terms with 20–30 year amortization. The property's cash flow funds the payments; the balloon is refinanced at maturity.
Borrowers buy raw land with low payments, then sell, build, or refinance before the balloon date arrives.
Sellers sometimes carry a balloon note so the buyer gets affordable payments while the seller recovers the balance in a few years.
The chart below compares a $200,000 loan at 6% under three structures: a balloon loan (5-year term, 30-year amortization), a standard 30-year fully amortizing mortgage, and a 5-year fully amortizing loan.
| Comparison | Balloon Loan (5/30) | Fully Amortizing (30 yr) | Fully Amortizing (5 yr) |
|---|---|---|---|
| Monthly Payment | $1,199.10 | $1,199.10 | $3,866.56 |
| Balloon Payment at Term End | $186,108.71 | $0.00 | $0.00 |
| Interest Paid Over 5 Years | $58,054.78 | $58,054.78 | $31,993.60 |
| Total Paid Over 5 Years | $258,054.78 | $71,946.10 | $231,993.60 |
| Debt After 5 Years | $186,108.71 | $186,108.71 | $0.00 |
| Best For | Low payments, short ownership | Long-term ownership | Fast payoff, high payments |
Start shopping for a refinance 6–12 months before the balloon matures. A good credit score and current income documentation make approval far easier.
If the asset is a car or property you plan to sell anyway, time the sale to close before the balloon date so the proceeds cover the balance.
Set aside a little each month toward the balloon. On the example loan, saving about $3,100/month for 5 years covers the full $186,109 balloon.
Some lenders will convert the balloon into a new amortizing loan at maturity. Ask about extension and conversion options before you sign.
The biggest risks are payment shock and refinance risk. If interest rates rise or your credit deteriorates before the balloon matures, you may not qualify for a refinance — leaving you with a large balance due all at once. If the asset's value falls below the balloon balance, you could owe more than the property is worth. Always run the numbers with our calculator, build a plan for the balloon date, and read the loan documents to confirm there is no prepayment penalty for paying the balloon off early.
⚠️ Important Disclaimer: Balloon payments are large lump sums — plan ahead to refinance or sell before the term ends. This Balloon Loan Calculator is for informational and educational purposes only. It provides estimates based on standard monthly-compounding formulas and does not account for fees, taxes, insurance, prepayment penalties, or other costs that may be part of your actual loan. Results should be verified with your lender or financial advisor before making any financial decisions. This calculator does not provide financial advice.