Loan Payment Calculator with Balloon Payment

Enter your loan amount, interest rate, term, and balloon payment amount to calculate your monthly payments. See total interest, total cost, and a full amortization schedule.

Created by Luis GonzalezLast updated: July 16, 2026

How to Use This Calculator

1
Enter Loan Amount
Input the total principal amount borrowed.
2
Set Annual Interest Rate
Enter the annual interest rate as a percentage.
3
Specify Loan Term
Enter the number of months until the balloon payment is due.
4
Enter Balloon Payment
Input the lump-sum amount due at the end of the loan term.
5
Review Your Results
The calculator displays your Monthly Payment, Balloon Payment Due, Total Interest Paid, and Total Cost of Loan. The Insights panel shows savings vs. fully amortizing, principal repaid, and interest share. Scroll down for the amortization schedule.

Example Calculation

A commercial property buyer has a $200,000 loan at 7% interest for 60 months with a $50,000 balloon payment due at the end.

Loan Amount ($)

200,000

Annual Interest Rate (%)

Loan Term (months)

Balloon Payment ($)

50,000

Results

Monthly Payment

$3,261.85

Balloon Payment Due

$50,000

Total Interest Paid

$45,710.79

Total Cost of Loan

$245,710.79

Tips

Plan for the Balloon Payment

Start saving or arrange refinancing well before the balloon is due. A $50,000 balloon on a $200,000 loan means you still owe 25% of the original amount after 60 months of payments.

Compare with Fully Amortizing

The balloon structure saves $698.39/month compared to fully amortizing ($3,960.24/month), but you must have a plan for the lump sum at the end.

Watch Interest Rate Risk

If you plan to refinance the balloon, consider that rates may be higher when the balloon comes due. Lock in refinancing terms early if possible.

Review the Amortization Schedule

Scroll down to see the month-by-month breakdown. Of your $195,711 in regular payments, 23% goes to interest — the rest pays down principal.

Understanding Balloon Payment Loans

A balloon payment loan structures your debt with smaller monthly payments during the term, followed by a large lump-sum (balloon) payment at the end.

The Loan Payment Calculator with Balloon Payment helps you understand exactly what your monthly payments will be and how much you'll pay in total.

For example, a $200,000 loan at 7% over 60 months with a $50,000 balloon requires monthly payments of $3,261.85 and total interest of $45,710.79.

The Balloon Loan Payment Formula

The calculator uses a modified amortization formula that accounts for the balloon payment at the end of the term:

Monthly Payment = [P - B/(1 + i)^n] x i / [1 - (1 + i)^-n]

Where:

P = loan amount (principal)
B = balloon payment amount
i = monthly interest rate (Annual Rate / 12 / 100)
n = number of monthly payments

The formula works by subtracting the present value of the balloon payment from the principal, then amortizing the remaining amount over the loan term.

💡 For a standard loan without a balloon payment, our Loan Payment Calculator computes your monthly payment with full amortization.

Calculating a Commercial Loan with Balloon: A Worked Example

Consider a $200,000 commercial loan at 7% annual interest for 60 months with a $50,000 balloon payment due at the end.

Monthly interest rate (i): 7% / 12 / 100 = 0.0058333
Present value of balloon: $50,000 / (1.0058333)^60 = $35,270.25
Adjusted principal: $200,000 - $35,270.25 = $164,729.75
Monthly payment: $164,729.75 x 0.0058333 / (1 - (1.0058333)^-60) = $3,261.85
Total regular payments: $3,261.85 x 60 = $195,710.79
Total interest: $195,710.79 - $150,000 (principal repaid) = $45,710.79
Total cost: $195,710.79 + $50,000 = $245,710.79

After 60 months of payments, you've repaid $150,000 of principal (75% of the loan) and owe the $50,000 balloon.

💡 For balloon loans specifically on vehicles, our Auto Loan Balloon Payment Calculator provides auto-specific insights.

Balloon vs. Fully Amortizing: Making the Right Choice

The key trade-off with balloon loans is lower monthly payments versus the obligation of a large final payment.

On the $200,000 example at 7% over 60 months, a fully amortizing loan would require $3,960.24/month — $698.39 more per month than the balloon version.

However, the fully amortizing loan has no lump sum due at the end.

Balloon loans make sense when you expect to sell the asset, refinance, or receive a large cash inflow before the balloon is due.

Risks and Considerations for Balloon Loans

Balloon loans carry specific risks that borrowers should carefully evaluate.

Refinancing risk is the primary concern — if interest rates rise before the balloon is due, refinancing could be significantly more expensive.

Market conditions could also affect your ability to sell the underlying asset.

Always have a clear exit strategy: either a dedicated savings plan for the balloon amount, a refinancing arrangement, or a planned asset sale.

Financial advisors recommend having the exit strategy documented before taking on a balloon loan.

Frequently Asked Questions

What is a balloon payment?

A balloon payment is a large lump-sum payment due at the end of a loan term. During the loan, you make smaller regular payments that do not fully amortize the balance. The remaining amount is paid as one final payment. For example, on a $200,000 loan with a $50,000 balloon, you pay $3,261.85/month for 60 months, then $50,000 at the end.

Who typically uses balloon payment loans?

Balloon payment loans are common in commercial real estate, business financing, and auto loans where borrowers expect to refinance, sell the asset, or have a large cash inflow before the balloon is due. They offer lower monthly payments than fully amortizing loans.

What happens if I cannot make the balloon payment?

If you cannot make the balloon payment when due, you may need to refinance the remaining balance into a new loan, sell the asset, or negotiate new terms with your lender. Failure to pay can result in default and potential loss of collateral.

How does a balloon payment reduce monthly payments?

A balloon payment reduces monthly payments because you are not fully paying off the loan during the term. On a $200,000 loan at 7% over 60 months, a $50,000 balloon reduces the monthly payment from $3,960.24 (fully amortizing) to $3,261.85 — a savings of $698.39/month.

How is the balloon loan payment calculated?

The formula is PMT = [P - B/(1+i)^n] x i / [1 - (1+i)^-n], where P is the loan amount, B is the balloon payment, i is the monthly interest rate, and n is the number of months. This adjusts the standard amortization formula by subtracting the present value of the balloon payment.