Balloon Payment Calculator

A balloon payment is a large lump sum due at the end of a loan that has not been fully amortized over its term. For example, a loan might have monthly payments calculated as if it were a 30-year mortgage, but the entire remaining balance comes due after 7 years. The monthly payments are lower than a fully amortizing loan, but you must be prepared to pay, refinance, or sell when the balloon is due.

Balloon loans are common in commercial real estate, land purchases, and construction financing. They are also used by buyers who plan to sell or refinance before the balloon date, and by borrowers who expect a significant income increase or asset sale in the future. They offer lower monthly payments in exchange for the risk of a large payment at maturity.

If you cannot make the balloon payment, your options include refinancing the remaining balance into a new loan, selling the property or asset to pay off the balance, or negotiating an extension with the lender. Failing to pay triggers a default, which can lead to foreclosure or repossession. Always have a clear exit strategy before taking on a balloon loan.