Why is the balloon so large?

Because the payment was sized for a much longer term. Five years into a twenty-year amortisation, most of what you paid was interest and the principal has barely moved.

Finance & LoansloansUnited States only

Balloon Payment Calculator

The lump sum due at the end of a balloon loan. Payments are set as if the loan ran much longer, so most of the principal is still outstanding when it falls due.

Also called: balloon loan calculator.

Balloon payment due

$217,255.25

$217,255.25 due after 60 months, on a payment of $2,013.98. That is 86.9% of the original loan still outstanding.

Monthly payment

$2,013.98

Balloon as a share of the loan

86.9%

Principal repaid before the balloon

$32,744.75

Interest paid before the balloon

$88,094.23

Total paid including the balloon

$338,094.23

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

The payment amortises over a long notional term, which keeps it low, but the loan ends early and the remaining balance falls due in one payment. Because interest is front loaded, very little principal has been repaid by then.

the outstanding-balance formula: the balloon is simply the balance at the balloon date

k: Months before the balloon (months)
E: Monthly payment (currency)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

five years into a twenty year amortisation

Loan amount: $250,000.00
Interest rate: 7.5%
Amortised as if over: 240 months
Balloon due after: 60 months

Balloon payment due$217,255.25

PMT(7.5%/12, 240, -250000) = 2013.98. The balance after 60 payments is 250000 x 1.00625^60 less 2013.98 x ((1.00625^60 - 1)/0.00625) = 217,255.25, which is 86.9% of the original loan still owed after a quarter of the notional term. Worked separately.

Open this example

a zero rate repays principal evenly

Loan amount: $250,000.00
Interest rate: 0%
Amortised as if over: 240 months
Balloon due after: 60 months

Balloon payment due$187,500.00

boundary: with no interest every payment is 250,000/240 and exactly three quarters of the principal is left after a quarter of the term

Open this example

Method and limits

What it assumes

A fixed rate, with the balloon repaid or refinanced at the date.

What it deliberately does not model

Refinancing the balloon depends on credit and rates at that future date, which is the real risk.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Why is the balloon so large?: Because the payment was sized for a much longer term. Five years into a twenty-year amortisation, most of what you paid was interest and the principal has barely moved.