What is a balloon payment?

A balloon payment is a large lump-sum payment due at the end of a partially amortized loan. It represents the remaining unpaid principal balance that has not been paid off through regular monthly payments. Because payments are calculated on a longer amortization schedule, less principal is paid down each month, resulting in a large balance remaining at maturity.

When are partially amortized loans used?

Partially amortized loans are common in commercial real estate, construction loans, and some business financing scenarios. They allow borrowers to keep monthly payments lower while committing to a shorter actual loan period. Borrowers often plan to refinance, sell the property, or use other funds to cover the balloon payment at maturity.

How is a partially amortized loan different from a fully amortized loan?

With a fully amortized loan (like a standard mortgage), the loan is completely paid off by the last regular payment — there is no remaining balance. With a partially amortized loan, regular payments only cover part of the principal. At maturity, a balloon payment is required to settle the remaining balance. Partially amortized loans typically have lower monthly payments but require planning for the balloon payment at the end.

What happens if I cannot make the balloon payment?

If you cannot make the balloon payment at maturity, you have a few options: refinance the remaining balance into a new loan, negotiate an extension with your lender, or sell the asset to pay off the balance. Failure to make the balloon payment can result in default, so it is critical to plan ahead by ensuring you have a refinancing strategy or adequate savings before the balloon payment is due.

Partially Amortized Loan Calculator - Balloon Payment

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Partially Amortized Loan Calculator

A partially amortized loan is repaid over a shorter actual term than its full amortization schedule. At the end of the loan term, a large balloon payment covers the remaining unpaid principal balance. This is common in commercial real estate and certain business loans.

Currency

Loan Amount

Min: 1,000 - Max: 100,000,000

Annual Interest Rate

Amortization Term

Years

Months

Full amortization period used to calculate regular monthly payments

Actual Loan Term

Years

Months

Actual period until balloon payment is due (must be shorter than amortization term)

Loan Calculation Results

Monthly Payment 0

Balloon Payment 0

Total Interest Paid 0

Total Payments Made 0

Principal Amount 0

Balloon Payment at Maturity

Month	Payment	Principal	Interest	Balance

This calculator uses the standard amortization formula to compute regular payments, then calculates the remaining principal balance at the end of the actual loan term as the balloon payment. Actual terms may vary by lender.

Frequently Asked Questions

A partially amortized loan follows a longer amortization schedule for calculating monthly payments, but the loan matures before it is fully paid off. The remaining unpaid principal — called a balloon payment — becomes due all at once at the end of the actual loan term. For example, a loan may be amortized over 30 years but have an actual term of only 7 years.

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