Calculate Balloon Mortgage

A loan in the amount of 100,000 at the interest rate of 8.5% for 30 years will balloon at the end of 5 years. How much is owed at the end of the fifth year?

This is a two step process. First, we need to find out how much needs to be paid each month if the loan is fully amortized in 30 years without the balloon.

Enter these three items:

PV - amount of the loan
Rate - interest rate
Terms - number of months to pay the loan

For example, a loan for 30 years of 100,000 at an interest rate of 8.5%, enter

PV - 100,000
Rate - 8.5
Terms - 360

The "Terms" is expressed in number of months which requires multiplying the number of years by 12, hence 30 years x 12 months per year = 360.

Press the PMT button and you get -768.91348. The resulting PMT value is generally, if not always, in the reverse sign of the present value, PV.

Second, we need to find how much is owed at the end of the fifth year when paying -768.91348 a month.

The calculator will still have all the values entered and calculated: PV(100000), Rate(8.5), Terms(360), and PMT(-768.91348). With a balloon mortgage, the term ends at the agreed upon time of 5 years, which is 60 months.

Replace the Terms value from 360 to 60 then press FV to calculate how much is still owed after the fifth year. In this case, it is -95490.26596. Again, it is generally in the opposite sign of the present value, PV.