Amortization Schedule for a Balloon Mortgage

A balloon mortgage uses the payment of a long loan but ends early. On a $300,000 loan at 6.5% with payments set over 30 years and a 7-year term, the payment is $1,896.20 and the balloon due at the end is $271,249.

The schedule below shows the balance after each year, so you can see where the balloon comes from.

What a balloon payment is

The CFPB says a balloon payment on a mortgage is a large, one-time payment at the end of the loan term.

The schedule is built on the longer 30-year amortization, which keeps the monthly payment low. The loan term is the shorter period before the lump sum is due. The balloon is the balance still unpaid when the term ends.

Schedule: $300,000 at 6.5%, 30-year amortization, 7-year term

YearInterest paidPrincipal paidBalance at year end
1$19,401$3,353$296,647
2$19,177$3,578$293,069
3$18,937$3,817$289,252
4$18,681$4,073$285,179
5$18,409$4,346$280,833
6$18,118$4,637$276,196
7$17,807$4,947$271,249
Balloon due$271,249

Monthly payment: $1,896.20 (principal and interest). Interest paid over the 7 years: $130,530. Each year is twelve payments of the same amount, with the interest part falling and the principal part growing.

The same loan with a 5, 7 or 10-year term

TermMonthly paymentBalloon dueShare of the loan still owed
5 years$1,896.20$280,83393.6%
7 years$1,896.20$271,24990.4%
10 years$1,896.20$254,32884.8%

The payment does not change with the term: only the date the balance comes due moves.

Build your own schedule

  1. Payment: the standard loan payment for the amortization years, for example PMT(rate/12, years x 12, -loan) in a spreadsheet.
  2. Each month: interest = balance x rate / 12, principal = payment minus interest, new balance = balance minus principal.
  3. Repeat for the number of months in the term. The balance after the last month is the balloon.

The same steps drive the schedule for a recast loan; see the recast amortization schedule and the payment formula.

Risk and ways to plan for it

The CFPB says a mortgage with a balloon payment can be risky because you will owe a larger payment at the end of the loan.

The CFPB says balloon payments are not allowed in loans deemed a Qualified Mortgage, with some limited exceptions.

  • Ask the lender for the balloon figure in writing and the date it is due.
  • Plan the refinance or sale months before the due date, not in the last month.
  • Extra payments toward principal reduce the balloon. See extra payments and payoff.

Frequently asked questions

Why is the balloon so large when I pay every month?

The payment is set as if the loan ran 30 years, so in the first years most of it is interest. After 7 years of payments on the example loan you have repaid $28,751 of the $300,000 borrowed, and $271,249 is left.

Does a shorter balloon term make the balloon smaller?

No, it makes it larger. At the same rate and payment the balance only falls as the years pass: $280,833 after 5 years, $271,249 after 7 and $254,328 after 10.

Is the balloon part of the last monthly payment?

It is due at the end of the term, together with or right after the last regular payment. Check your note for the exact date and ask the lender for a payoff figure a few months before.

Can extra payments shrink the balloon?

Yes. Every dollar paid toward principal comes off the balance that is due at the end. The payment stays the same, so the balloon falls by the extra amount plus the interest it saves.

What if I cannot pay or refinance the balloon?

Talk to the lender well before the due date about an extension or a new loan. Having the balloon figure early gives you months to compare offers instead of days.

Sources

Every figure on this page comes from the pages below. Checked 2026-11-05. Rules change, so confirm with your own servicer.

More recast guides