Balloon Payment Loan Calculator
Calculate your monthly payments and the final lump-sum balloon payment.
Loan Details
Your Final Balloon Payment
$0.00
Regular Monthly Payment
$0.00
Total Interest Paid
$0.00
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Understanding Balloon Payment Loans
What is a Balloon Payment?
A balloon payment loan is a type of financing that has lower monthly payments for a set period, but requires the borrower to pay off the remaining balance in a large, lump-sum payment at the end of the term. The monthly payments are calculated as if the loan were for a much longer period (the “amortization term”), which keeps them low. Our Balloon Payment Loan Calculator shows you both the smaller monthly payment and the large final payment.
How This Balloon Payment Loan Calculator Works
This tool is designed to provide a clear picture of how a balloon loan is structured:
- Amortization Term: This is the full length of time the loan is calculated over (e.g., 30 years). This determines your low monthly payment.
- Balloon Term: This is the actual length of your loan contract (e.g., 5 or 7 years). At the end of this period, the entire remaining balance is due.
- The Results: The calculator shows your regular monthly payment, the total interest you’ll pay during the term, and the large final balloon payment you will owe. The schedule shows exactly how the balance decreases leading up to that final payment.
Who Uses Balloon Loans?
While less common for standard home mortgages, balloon payment loans are frequently used in specific financial situations:
- Commercial Real Estate: Businesses often use these loans to purchase property, planning to sell or refinance before the balloon payment is due.
- Investors: Real estate investors who intend to flip a property quickly can benefit from the lower initial payments.
- Borrowers Expecting a Windfall: Someone who anticipates a large sum of money in the future (like an inheritance or bonus) might use a balloon loan to keep payments low in the short term.
Important: Balloon loans carry significant risk. If you are unable to pay the final lump sum or refinance the loan, you could face foreclosure.