Balloon Payment Calculator
Calculate balloon loan payments with lower monthly payments and lump sum due at term end. Analyze payment schedules for 5/25, 7/23 balloon mortgages.
How it works
Balloon loans calculate monthly payments using the full amortization period (e.g., 30 years), but the remaining principal balance becomes due at the balloon term (e.g., 5 years). This creates lower monthly payments but requires refinancing or paying off the balloon amount.
Example
$300K loan at 6% with 5/30 structure = $1,799/month for 5 years, then $279,017 balloon payment due.
FAQ
What is a balloon payment?
A balloon payment is a large lump sum payment due at the end of a loan term. The monthly payments are calculated as if it's a longer-term loan, but the remaining balance is due in full at the balloon date.
What does 5/25 balloon loan mean?
A 5/25 balloon loan has payments calculated on a 25-year amortization schedule, but the remaining balance is due in full after 5 years. Common structures include 5/25, 7/23, and 10/30.
Are balloon payments risky?
Yes, balloon payments carry refinancing risk. You must either refinance, sell the property, or have cash available when the balloon payment is due. Market conditions may affect your ability to refinance.
Who uses balloon loans?
Balloon loans are common in commercial real estate, bridge financing, and situations where borrowers expect to sell or refinance before the balloon date. They offer lower monthly payments in exchange for refinancing risk.
How do I calculate balloon payment amount?
Calculate monthly payments using full amortization period, then determine remaining principal balance after the balloon term ends. This remaining balance is your balloon payment.