Partially Amortized Loan — Smart Financial Analysis
Calculate balloon payments for partially amortized loans. 5/25, 7/23 structures. Monthly payment and balloon amount.
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A partially amortized loan has regular payments based on a long amortization (e.g., 25-30 years) but a shorter term (e.g., 5-7 years). The balloon is the remaining loan balance at the end of the payment period. Fully amortized: payments pay off the loan by term end. 5/25 (5-year term, 25-year amortization) and 7/23 are common.
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Why: A partially amortized loan has regular payments based on a long amortization (e.g., 25-30 years) but a shorter term (e.g., 5-7 years). At term end, a large balloon payment cover...
How: Enter Loan Amount ($), Annual Rate (%), Amortization (years) to get instant results. Try the preset examples to see how different scenarios affect the outcome, then adjust to match your situation.
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📊 Payment Bar
📈 Balance Over Time
🍩 PI Split
📊 Structure Bar
Balloon Payment
Monthly: $2,026
For educational purposes only — not financial advice. Consult a qualified advisor before making decisions.
💡 Money Facts
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A partially amortized loan has regular payments based on a long amortization (25-30 years) but a shorter term (5-7 years). At term end, a balloon payment covers the remaining balance. Typical balloon amounts are ~$180K on a $300K loan. About 30% of commercial loans use balloon structures. Common forms: 5/25 and 7/23. Plan to refinance or sell before the balloon is due.
Sources: CFPB, FDIC, Freddie Mac, MBA.
Key Takeaways
- • Lower monthly payments than fully amortized.
- • Balloon due at term end — refinance or sell.
- • 5/25 and 7/23 are common structures.
- • Have an exit strategy before taking a balloon loan.
Did You Know?
How Does a Partially Amortized Loan Work?
Payment Calculation
Monthly payment = same as fully amortized over the full amortization period. Example: $300K at 6.5% for 25 years ≈ $2,028/month.
Balloon Calculation
After 5 years of $2,028 payments, remaining balance ≈ $268K. That's the balloon. Formula: B = P(1+r)^n - M[((1+r)^n - 1)/r].
Exit Options
Refinance to a new loan, sell the property, or pay the balloon in cash. Plan ahead — rates and values can change.
Expert Tips
Structure Comparison
| Structure | Term | Amort | Typical Use |
|---|---|---|---|
| 5/25 | 5 yrs | 25 yrs | Commercial RE |
| 7/23 | 7 yrs | 23 yrs | Investment property |
| 10/25 | 10 yrs | 25 yrs | Bridge / construction |
Frequently Asked Questions
What is a partially amortized loan?
A partially amortized loan has regular payments based on a long amortization (e.g., 25-30 years) but a shorter term (e.g., 5-7 years). At term end, a large balloon payment covers the remaining principal. Common in commercial real estate.
How does a balloon payment work?
The balloon is the remaining loan balance at the end of the payment period. Payments are calculated as if the loan ran the full amortization, but the term is shorter. You must refinance, sell, or pay cash when the balloon is due.
What is the difference between partially and fully amortized?
Fully amortized: payments pay off the loan by term end. Partially amortized: payments don't pay it off; a balloon is due. Partially amortized has lower monthly payments but refinancing/sale risk.
What are typical balloon loan structures?
5/25 (5-year term, 25-year amortization) and 7/23 are common. Commercial loans often use 5-10 year terms with 20-30 year amortization. Bridge loans may use 1-3 year balloons.
What are the risks of balloon loans?
Refinancing risk (rates may rise), property value risk (can't sell for enough), and cash flow risk (balloon due when you can't pay). Have an exit strategy before taking a balloon loan.
How is the balloon payment calculated?
Balloon = remaining balance after the payment period. Use the standard amortization formula: balance = P(1+r)^n - M[((1+r)^n - 1)/r], where M is the monthly payment, n is payments made.
Key Statistics
Official Data Sources
⚠️ Disclaimer: This calculator is for educational purposes only. Balloon loans carry refinancing and market risk. Consult a lender or financial advisor before committing. Not financial advice.
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