Balloon Mortgage Calculator

How to Calculate Balloon Mortgage Payments With This Calculator

To calculate your balloon mortgage payments, input the following information:

1. Loan amount: Enter the amount you want to borrow.
2. Loan term: Use the dropdown to choose your desired loan term.
3. Interest rate: You can use our current mortgage interest rates as estimates. Be sure to enter the interest rate, not the annual percentage rate (APR).

When you click the Calculate button, you'll see these results:

• Monthly payment: Your monthly mortgage payment (principal and interest)
• Final balloon payment: The amount of the balloon payment, including principal and interest
• Total interest paid: The total interest paid over the life of the loan

Before final balloon payment:

• Total paid: The total amount of both principal and interest you'll pay before the balloon payment is due
• Remaining balance: The loan balance remaining when all payments but the balloon payment are made
• Principal paid: The total amount of principal you'll pay before the balloon payment is due
• Interest paid: Breakout of total interest you'll pay before the balloon payment is due

Compare mortgage rates

Check today’s rates to find the best loan offers. Staying updated on current rates helps you secure a competitive mortgage and save more over time.

What to Consider Before Getting a Balloon Mortgage

A balloon mortgage is a short-term home loan, typically for five to 10 years, that has low monthly payments to start, sometimes with the option to make interest-only payments. At the end of the term, you make a one-time balloon payment, generally for the remaining loan balance.

Before getting a balloon mortgage, you'll want a plan in place for how to make the balloon payment. If you can't make the balloon payment, you may be able to get a temporary extension or reset your loan into a new, fully amortizing loan at current interest rates. In either case, you should begin exploring your options with your lender well in advance of the balloon payment due date.

If your lender doesn't allow a mortgage extension or reset, you can either refinance into a new loan or sell the home.

A balloon mortgage might make sense if you're investing in a property you plan to sell, intend to move before the balloon payment is due or expect to have the financial resources to make the balloon payment. For instance, if you're graduating from law school or medical school in a few years, you might buy a home using a balloon mortgage and refinance into a new loan once you're established in your profession.

For most people, however, a balloon mortgage is a big risk. If you can't make the balloon payment, the lender can foreclose on the home.

Learn more: What Type of Mortgage Loan Is Best?

Pros and Cons of a Balloon Mortgage

Balloon mortgages have both benefits and risks to consider.

Learn more: Reasons to Avoid a Loan With a Balloon Payment

Factors That Affect Your Mortgage Payment

The primary factors impacting your mortgage payment are principal, interest, taxes and insurance (PITI).

• Principal: The amount you borrow to buy a home. Typically, each mortgage payment goes toward both principal and interest. With balloon mortgages, however, little or none of your payment goes toward principal.
• Interest: Your credit score, down payment, loan amount, loan term and current mortgage rates all impact your mortgage interest rate. Balloon mortgages sometimes have higher interest rates than traditional mortgages because lenders consider them riskier.
• Taxes: Many lenders include a prorated amount for property taxes in your mortgage payment. The lender keeps the funds in an escrow account and uses it to pay the taxes.
• Insurance: Lenders generally require you to carry homeowners insurance to protect the home. This cost can be rolled into your mortgage payment, with the funds placed into an escrow account that's used to pay your premiums.
• Private mortgage insurance (PMI): If you make a down payment of less than 20%, lenders generally require private mortgage insurance. PMI protects the lender if you don't pay back your loan; the cost is usually included in your mortgage payment.

Tip: If you have an escrow account, your mortgage payment can change as your property taxes or insurance premiums change, even if your mortgage interest rate stays the same.

Learn more: How Much House Can I Afford?

How to Get a Balloon Mortgage

Take these steps to get a balloon mortgage.

1. Check your credit. Balloon mortgages are nonqualified mortgages, meaning they're exempt from certain consumer protection requirements and typically have looser credit score criteria. However, a higher credit score can still help you qualify for lower interest rates. You can check your credit report and FICO^® Score^Θ for free with Experian anytime and get free credit reports from TransUnion and Equifax weekly at AnnualCreditReport.com.
2. Shop for lenders. Balloon mortgages are generally offered by smaller lenders, such as credit unions, rather than large banks. Because balloon mortgages can be hard to find, you may want to work with a mortgage broker.
3. Get preapproved. A loan preapproval letter estimates the loan amount and terms you're likely to be approved for. Getting preapproved generally involves submitting documentation of your income and assets and undergoing a credit check. Preapproval for nonqualified mortgages tends to be more lenient than for traditional mortgages; check with each lender to see what they require. Getting preapproved with a few lenders lets you compare rates, closing costs and loan terms.
4. Close on the loan. Once your offer on a home is accepted, you'll go through the underwriting process, which usually takes a month or two. Carefully review loan documents before closing on the loan, and be prepared to make your down payment and pay closing costs.

Tip: The hard credit check required for mortgage preapproval can cause a temporary dip in your credit score. To reduce any negative impact, submit all your preapproval applications within a two-week period.

Learn more: How to Shop for a Mortgage

The Bottom Line

A balloon mortgage can mean more affordable loan payments, but also poses financial risks. To protect yourself, carefully consider the pros and cons and have a solid plan for covering the balloon payment before getting a balloon mortgage.

No matter what type of mortgage you're seeking, you can boost your borrowing power by taking steps to improve your credit before you apply for a loan. Free credit monitoring from Experian can help as you get ready to shop for a mortgage. You'll be able to track your FICO^® Score and get alerts of important changes to your credit that could affect your ability to get a loan.