Balloon Loan Calculator

What Is a Balloon Loan?

A balloon loan features regular monthly payments for a set period (usually 5-7 years) followed by a large lump-sum "balloon" payment of the remaining principal. These loans typically have lower monthly payments than traditional amortizing loans, but come with significant refinancing risk.

When to Consider a Balloon Loan

• Short-term borrowing: If you plan to sell the asset before the balloon payment is due
• Business loans: When you expect a future cash windfall to cover the balloon
• Bridge financing: Temporary financing between buying a new property and selling an existing one

Risks to Consider

The biggest risk is being unable to make the balloon payment when due. If your financial situation changes or property values decline, refinancing may not be an option. Always have a backup plan and consider traditional loan structures for long-term financing.