Financing
What Is a Balloon Payment?
A balloon payment is the large remaining balance that comes due when a loan's term ends before its amortization schedule does.
Most commercial park loans amortize over 20 to 25 years but mature in 5, 7, or 10. You make payments as if the loan runs the full amortization, then the entire remaining balance, the balloon, comes due and you refinance or sell to pay it off. The risk is refinancing into an unknown future interest rate, which is exactly what a stress test models.
See the balance due at any term on the commercial mortgage calculator, and how to stress it in stress testing a deal.
See it on a real deal
RVP Underwriter computes this from your documents automatically, with every figure shown and sourced. Underwrite a deal free.
Related terms
Part of the RVP Underwriter glossary of income-property underwriting terms. Browse all definitions, or put them to work with the free calculators.