How It Works
The regular payment is calculated using the full amortization term. The balloon balance is the remaining principal after the specified number of payments.
A balloon loan can have regular payments that are smaller than a fully amortizing loan because the balance is intentionally left outstanding at the balloon date. The calculator estimates that remaining balance after the scheduled payments.
Because the balloon can be substantial, compare the remaining balance with your expected cash resources or refinancing options before relying on this type of financing.
Formula
- P — Original loan amount
- M — Scheduled monthly payment
- B — Remaining balance at balloon date
Example
Example inputs: Loan $100,000, 7%, amortized over 20 years with a balloon after 5 years.
Result: The calculator reports the regular monthly payment and the estimated balloon balance due after 5 years.
Frequently Asked Questions
What is a balloon payment?
It is a large final payment that remains because the loan has not fully amortized by its maturity date.
How is the balloon amount determined?
It is the remaining loan principal after the scheduled number of payments under the rate, starting balance, and payment structure entered in the calculator.
Why can the regular payment look unusually low?
The loan is not being fully paid off during the scheduled period. Part of the principal remains due as the final balloon payment.
This calculator provides estimates for informational purposes only and should not be considered financial, tax, or legal advice.