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Amortization and balloon calculator

Many commercial loans are paid as if they ran 25 or 30 years but come due in 5 or 10. What is left at the end is the balloon. Type the loan and see the payment, the balloon and the interest paid.

By Research desk, The Lender Report ·Sources reviewed November 9, 2026

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JavaScript is off, so the form cannot calculate. The worked example below shows the same arithmetic for sample numbers, and the formula is written out under it.

A worked example

Loan $3,000,000 at 6.50%, amortized over 25 years, due in 10. Example numbers.

Monthly payment, principal and interest: $20,256
Interest paid over the term: $1,756,087
Principal repaid by maturity: 22.5%
Balance due at maturity (the balloon): $2,325,341

Year by year
Year	Paid	Interest	Principal	Balance at year end
1	$243,075	$193,542	$49,533	$2,950,467
2	$243,075	$190,224	$52,850	$2,897,617
3	$243,075	$186,685	$56,390	$2,841,227
4	$243,075	$182,908	$60,166	$2,781,061
5	$243,075	$178,879	$64,196	$2,716,865
6	$243,075	$174,580	$68,495	$2,648,370
7	$243,075	$169,992	$73,082	$2,575,288
8	$243,075	$165,098	$77,977	$2,497,311
9	$243,075	$159,876	$83,199	$2,414,112
10	$243,075	$154,304	$88,771	$2,325,341

After ten years of on-time payments the borrower has repaid 22.5% of the principal and still owes $2,325,341. With two years of interest-only payments at the start, the balloon is $2,407,503 and the payment after that rises to $20,972.

How it works

The payment is set as if the loan would be paid off over the amortization. The loan comes due at the term, which is shorter, and the balance left at that date is due in one sum. The balance after m payments is the loan times (1 plus r) to the power m, less the payment times ((1 plus r) to the power m, less 1) divided by r, where r is the monthly rate.

Early payments are mostly interest. In the example, year one pays $193,542 of interest and $49,533 of principal.

What a balloon means in practice

A balloon is a refinancing risk. At maturity the borrower pays the balance, refinances it or sells. Whether a lender will refinance depends on the property, the cash flow and the market at that date, none of which the borrower controls today.

The interagency real estate lending guidelines tell each bank to set standards for the acceptability of, and limits on, non-amortizing loans in its own policy. They give no numbers. In SBA 504 the bank loan must run at least 10 years when the debenture runs 20 or 25 years, and at least 7 years when the debenture runs 10. If the bank loan has a balloon, SBA requires that it be justified in the loan report and identified in the loan terms.

Using it well

Ask for both numbers. A lender quoting a payment should say the amortization it is set on and the date the loan comes due.
Plan the balloon. Run the balance at maturity through the maximum loan calculator at the rate you expect then, using the cash flow you expect then. That tells you whether the balloon can be refinanced.
Treat interest only as a delay. It lowers the payment now and raises it later, and it leaves the balloon higher.

In the data here

HMDA records the rate and the loan term as filed on multifamily loans, so the recorded loans behind a lender show how long its loans ran. HMDA does not record the amortization, so a recorded term cannot tell you whether a loan had a balloon.

Terms used here

Amortization: The schedule on which a loan's principal is paid down through regular payments. The amortization period sets the payment size and can be longer than the loan's term.
Balloon payment: The lump sum of remaining principal due at the end of a loan's term when the regular payments did not pay the loan off in full.
Interest-only (IO): A loan, or a stretch of a loan's term, in which payments cover interest alone and the principal balance does not go down.

Sources

12 CFR part 365, Appendix A, Interagency Guidelines for Real Estate Lending Policies (standards for non-amortizing loans), current as of November 9, 2026.
SBA SOP 50 10 8.1, Section C Chapter 1, third party loan term and balloon payments (13 CFR 120.921), effective October 1, 2026.

Next step: check the record

Loan CompsRate and term as filed appear on the recorded multifamily loans behind each lender.
Multifamily lendersBanks and credit unions that hold multifamily loans, with the size of each book.

Keep reading

How bankers evaluate a commercial loan deal: A credit officer asks one question five ways: how will this loan be repaid, and what happens if it is not? Knowing the five tests lets you size a request before you send it.

Estimate from your inputs. Not a quote or advice about which loan to take. Another tool: all calculators.