π Partially Amortized Loan Calculator
Small payments now, one big balloon later.
Lump sum owed when the loan comes due
Estimates for planning only, not financial advice.
A partially amortized loan, usually called a balloon loan, sets payments as if it ran 30 years but demands the remaining balance after 5, 7, or 10 years. Borrow $300,000 at 7 percent amortized over 30 years with a 7-year balloon: payments are $1,995.91 a month, but after 84 payments you still owe $273,442.24 in one lump sum. The low payment is real; so is the cliff.
How to Use This Calculator
Enter the loan amount, rate, the amortization schedule the payments are based on, and when the balloon comes due. The calculator shows the monthly payment and the exact balloon balance, plus how much principal and interest you will have paid by then.
Enter loan amount, rate, and the amortization term that sets the payment size.
Enter when the balloon is due. It must fall before the amortization ends.
Read the balloon and plan the exit: refinance, sell, or pay cash. Our refinance break-even calculator prices the refinance path.
The Balloon Loan Formula
Payments follow the full amortization schedule, so early payments are mostly interest and barely dent principal. The balloon formula is just the amortized balance after k payments: the original principal grown with interest, minus the payments' accumulated value. After 7 years of a 30-year schedule, most of the loan remains.
Worked Example
$300,000 at 7 percent, 30-year amortization, balloon at 7 years. Monthly payment: $1,995.91. After 84 payments totaling $167,656, the remaining balance is $273,442.24. Only $26,558 of principal was repaid; $141,098 went to interest. The borrower must refinance, sell, or produce $273,442 in year seven.
Reading Your Result
Balloon loans make sense when you are certain of the exit: a planned sale, a known refinance, or a business asset with a defined horizon. They are dangerous when the exit is a hope, because refinancing depends on rates, property values, and your credit all cooperating in the balloon year. 2008 taught this lesson at scale.
My rule: never take a balloon loan without a written Plan B for the due date. If rates rise 3 points by year seven, can you still refinance? If the property value falls 20 percent, can you still sell clear? If the answer to either is no, the lower payment is not a deal, it is a timer. Price the fully amortizing alternative with our loan amortization calculator and compare the true cost of the risk you are taking.
Every balloon loan is really two decisions: the loan today and the exit later. Underwrite the exit first, refinance, sale, or cash, and stress-test it: what if rates are three points higher at maturity, or the property appraises 20 percent lower? If the exit fails under stress, the loan fails. Borrowers who plan the balloon date as carefully as the closing date sleep well; the rest refinance in a panic.
Estimates for planning only, not financial advice.
Frequently Asked Questions
What is a partially amortized loan?
A loan with payments calculated over a long amortization schedule (often 30 years) but with the full remaining balance due much sooner (often 5 to 10 years). The early payments are affordable; the balloon payment at the end is large.
How is the balloon payment calculated?
It is the remaining loan balance after the scheduled payments: original principal plus accrued interest minus the payments made. Because early payments are mostly interest, the balloon stays close to the original loan amount. Interest-only periods make it worse: the balloon then equals the full original principal.
Why would anyone choose a balloon loan?
For lower payments during a defined holding period: a flipper selling in three years, a business matching debt to an asset's life, or a borrower expecting much higher income soon. The key is a certain, planned exit before the balloon.
What happens if I cannot pay the balloon?
You must refinance, sell the asset, or default. Lenders sometimes extend or rewrite the loan, but they are not obligated to. An unplanned balloon in a bad market is how borrowers lose properties. Build the exit into the original plan: every balloon loan needs a refinance or sale story on day one.
Are balloon mortgages still common?
Less than before 2008. Qualified Mortgage rules restrict some balloon features for most residential lenders, though exceptions exist for small creditors in rural areas. Commercial real estate still uses balloons widely. Dodd-Frank's Ability-to-Repay rules pushed most residential balloons out of the mainstream market.
How does a balloon loan differ from an ARM?
A balloon demands the whole balance at a date; an ARM just reprices the rate and continues amortizing. ARMs have rate risk; balloons have refinancing risk. Both punish borrowers who assumed the good terms would last. Hybrid ARMs like 5/1s are the modern mainstream alternative: fixed for five years, then adjusting.
Can I refinance a balloon loan?
Usually yes, and most balloon borrowers plan to. Refinance before the due date while your credit and the collateral value are strong. Waiting until the balloon month surrenders all negotiating leverage. Start the refinance 6 to 12 months early: appraisals and underwriting always take longer than quoted.
Do balloon payments include interest?
The balloon is the remaining principal balance; you have been paying interest monthly all along. Some structures differ, so read the note: a few accrue unpaid interest into the balloon. Negative amortization balloons grow over time: the balance due exceeds what you borrowed.
What is a 5/25 or 7/23 balloon?
Shorthand: payments amortized over 25 or 30 years total, with the balloon due after 5 or 7 years. The first number is the due date, the second the amortization schedule. Always confirm both in the loan documents. Commercial balloons often pair with extension options: one 12-month extension can save a deal.
Is a balloon loan ever a good idea for a home?
Rarely for a primary residence, where the exit is uncertain and the stakes are your home. It can fit a short, certain holding period like a planned relocation. For most homeowners, the fully amortizing loan's higher payment buys irreplaceable safety.