Balloon maturity
Your church balloon payment is coming due
A balloon loan is written on a long amortization schedule but comes due in five to ten years. On maturity day the church still owes most of the principal, and the whole balance reprices at whatever rates have done since. Here is what that reset costs, what to do in the months before it lands, and the options if a new loan is not ready in time.
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83%
Still owed at maturity
Of the original loan, year 7 of a 25-year schedule
+$1,606
Monthly payment change
$6,841 to $8,448 at 7.61%
$127K
Net income the new payment needs
A year, at 1.25x coverage
6 of 16
Lenders publishing a close window
Of those that refinance church debt
The reset math
What 7 years of payments actually bought
A church borrows $1,200,000 in 2019 at 4.75%, on a 25-year amortization with a 7-year balloon. The payment is calculated as though the loan runs 25 years, so the early years are mostly interest. When the balloon matures, the church still owes $992,074, about 83% of what it borrowed, and that whole balance has to be refinanced.
| The original loan | After the reset | |
|---|---|---|
| Loan amount | $1,200,000 | $992,074 refinanced |
| Rate | 4.75% | 7.61% |
| Years of payments left | 18 | 18 |
| Monthly payment | $6,841 | $8,448 |
| Net income needed at 1.25x coverage | $102,621 a year | $126,717 a year |
The payment moves from $6,841 to $8,448 a month, up $1,606 (23%). Nothing about the church changed. The rate the loan renews at did.
Replacement rate is today's 10-year Treasury (5.11%, FRED, Sep 23, 2026) plus 2.5 points, a typical church spread. It is an illustration, not a quote: your rate depends on your coverage, your loan-to-value, and the lender.
Run your own numbers
Payment reset estimator
Put in the balance your balloon matures at and the rate you expect to renew at. Your lender's payoff statement has the balance; if you do not have one yet, ask for it.
After the reset
$8,450a month
+$1,650 a month versus what you pay now
- Net income needed at 1.25x coverage
- $126,746 a year
- Total of the new payments
- $1,825,142
Principal and interest only: taxes, insurance, and any escrow sit on top. For break-even on closing costs and lifetime cost, use the refinance savings calculator.
The countdown
What to do, and when
A balloon is the rare church loan event with a date you have known for years. Churches that refinance calmly start about two years out. Churches that end up taking whatever they can get start in the last quarter.
- 24 months out
Put the date in front of the board
Find the maturity date in your note and say it out loud at a board meeting. Two years is enough time to fix a coverage or loan-to-value problem. Six months is not.
- 18 months out
Get a current payoff figure and a rate check
Ask your lender for the balance at maturity in writing. Price it at today’s rates, not the rate you have. If the payment would strain the budget, this is the moment to start trimming other debt.
- 12 months out
Clean up the financials lenders will read
Three years of statements, a current budget against actuals, board minutes authorizing the debt, and giving records. Underwriters read the trend, so a year of improvement counts.
- 9 months out
Ask your current lender about renewal first
Renewing with the lender that holds the note is usually the cheapest and fastest path, and they already know the property. Get their terms in writing before shopping, so you have a benchmark.
- 6 months out
Apply to two or three lenders, in parallel
Extension funds, faith-based credit unions, and brokers price the same church differently. Applying in parallel gives you real comparisons instead of one offer and a deadline.
- 3 months out
Order the appraisal and lock the path
Appraisal, title, and any environmental work take weeks and run on someone else’s calendar. If nothing is approved yet, ask your current lender for a written extension now rather than in the final month.
At maturity
Five options when the balloon comes due
Most churches use the first three. The last two exist for the cases where the calendar or the payment has already gotten away from you.
Renew with your current lender
The lender holding the note writes a new term at current rates, often with light paperwork and no new appraisal.
- When it fits
- Payments have been on time and the property has not lost value.
- Watch out
- A renewal offer arriving three weeks before maturity is hard to compare with anything. Ask early enough to price it against one other lender.
Refinance with a different lender
A new loan pays off the balloon. Extension funds, faith-based credit unions, and brokers all compete for this.
- When it fits
- Your coverage and loan-to-value are in range, and there is time for underwriting and an appraisal.
- Watch out
- Closing costs and an appraisal come out of pocket, and the timeline is someone else’s. Start at least six months out.
A written extension
The current lender pushes the maturity date out, often 60 to 180 days, so a refinance in progress can finish.
- When it fits
- A new loan is approved or close, and the calendar is the only problem.
- Watch out
- Get it in writing, with the new date and rate. A verbal "we will work with you" is not an extension, and a matured note is technically in default.
A bridge loan
Short-term financing pays off the balloon while a permanent loan is arranged or a property sells.
- When it fits
- A genuine gap: a campaign paying out later, a building under contract, a permanent loan a few months away.
- Watch out
- Expensive on purpose. Rates run well above permanent financing, plus fees. Only take one with a dated exit you can name.
Pay it down, then refinance a smaller balance
Reserves or the tail of a capital campaign reduce the balance before the new loan is written.
- When it fits
- The reset payment is the problem rather than the approval, and reserves exist beyond operating needs.
- Watch out
- Lenders want reserves left after closing. Emptying the account to shrink the loan can fail the very test it was meant to pass.
How long closing takes
Lenders that publish a closing window
With a maturity date fixed, how fast a lender closes matters as much as the rate. Of the 16 lenders we review that refinance church debt, 6 publish a timeline. The other 10 quote it case by case, which usually means asking early.
| Lender | Type | Published close window |
|---|---|---|
| AGFinancial | Extension Fund | 60 to 90 days |
| BCLC (Baptist Church Loan Corporation) | Extension Fund | About 4 to 6 weeks |
| Emerging Capital Funding | Broker | 30 to 90 days |
| Griffin Church Loans | Broker | 10 days to 3 months |
| Solomon Foundation | Extension Fund | 30 to 90 days |
| Thrivent Church Financing | Bank | About 4 weeks |
Windows are what each lender publishes for a straightforward file, taken from their own materials and dated on their review page. Appraisal delays, title problems, and board calendars all push them out. ChurchLend has no lender partnerships and no lender pays for its position.
Questions
Church balloon payments, answered
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