Partially Amortized Loan Calculator

Understanding Partially Amortized Loans

A partially amortized loan (also known as a balloon loan) combines fixed monthly payments with a lump-sum balloon payment at loan maturity. The monthly payments are calculated using a longer amortization schedule (such as 30 years), but the loan term ends early (such as after 5, 7, or 10 years).

Balloon Payment Formula

The remaining loan balance $B_k$ due at balloon maturity month $k$ is calculated as:

\[ B_k = P \times \frac{(1 + r)^N - (1 + r)^k}{(1 + r)^N - 1} \]

Where $P$ is original loan principal, $r$ is monthly interest rate, $N$ is total amortization schedule months, and $k$ is elapsed months until maturity.

Why Use a Balloon Loan?

Borrowers choose partially amortized loans for lower initial monthly payments or when planning to refinance, sell the property, or obtain permanent financing prior to balloon maturity.