Calculate a Balloon Mortgage A balloon mortgage is a type of mortgage where the interest rate is fixed for an initial period of time. At the end of that period, the remaining balance is due in full. At that point, unless the homeowner can pay off the remaining balance, he/she must seek out another mortgage. For example, a 5/25 balloon mortgage has an fixed initial period of 5 years at which point the interest rate changes depending on the market for the next 25 years. Principle balance:     $ Initial interest rate of mortgage:      % Type of mortgage:     3/27 5/25 6/24 7/23 8/22 9/21 10/20 Down Payment:     $ Starting month and year:     Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec 2008200920102011201220132014201520162017 * Calculations do not include closing costs, insurance fees or taxes Definitions Principle Balance: The initial amount the mortgage is taken out for. Initial Interest Rate: The cost of borrowing the money for the initial fixed period of the mortgage. Type of Mortgage: The number of years the interest rate is fixed at the initial rate followed by the years remaining at an adjusted rate. For example, a 5/25 balloon mortgage has an fixed initial period of 5 years at which point the interest rate changes depending on the market for the next 25 years. Down Payment: Amount of money that you pay off when you take out the mortgage. This amount gets deducted from the principle balance. Starting Month and Year:     The month and year that the mortgage starts.