Balloon Mortgage Calculator
Calculate monthly payments and the balloon payment due at term end.
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A balloon mortgage has lower monthly payments for a set period, then requires a large lump-sum payment. This calculator helps you understand both amounts:
- Enter the loan amount. This is the total mortgage principal, after any down payment has been subtracted from the home price.
- Enter the interest rate. Use the rate your lender has quoted or a current market estimate. Balloon mortgages sometimes offer slightly lower rates than standard fixed-rate loans.
- Choose the balloon period. This is how many years you make regular payments before the balloon payment is due. Common terms are 5 and 7 years.
- Choose the amortization period. Monthly payments are calculated as if the loan were spread over this longer period (typically 30 years), which is why the payments are lower. The remaining balance becomes the balloon payment.
Your monthly payment and balloon payment amount appear instantly. The context line shows how much you will have paid in total before the balloon comes due and how much of that went to interest.
About Balloon Mortgages
A balloon mortgage is a loan where you make regular monthly payments for a short period (usually 5 to 7 years) and then must pay the entire remaining balance in one lump sum. The monthly payments are calculated using a longer amortization schedule, often 30 years, so they are lower than a fully amortizing loan of the same short term.
Balloon mortgages are most common for borrowers who plan to sell or refinance before the balloon payment is due. They carry risk: if property values drop or rates rise, refinancing may be difficult. All calculations run locally in your browser with no data stored.
Frequently Asked Questions
What happens when the balloon payment is due?
When the balloon period ends, the full remaining balance must be paid. Most borrowers refinance into a new mortgage, sell the property, or pay the lump sum from savings. If you cannot pay, the lender may foreclose, so it is important to plan ahead.
Why are balloon mortgage payments lower?
Payments are calculated using a longer amortization period (e.g., 30 years) even though the loan term is shorter. Since the payment schedule assumes a longer repayment window, each monthly payment is smaller. The trade-off is the large balloon payment at the end.
Who should consider a balloon mortgage?
Balloon mortgages may suit borrowers who expect to sell or refinance within the balloon period. They are also used in commercial real estate and by borrowers expecting a significant income increase. If you plan to stay in the home long-term, a standard fixed-rate mortgage is usually a safer choice.