Quick answer
A balloon payment is a larger-than-usual, one-time payment due at the end of a loan, because the regular payments were too small to pay off the balance by the due date.
Key facts
7.24%
30-year fixed average (used in the example)
Freddie Mac Primary Mortgage Market Survey · Week of Oct 29, 2026
How a balloon loan is built
A common design figures the payment as if the loan ran 30 years but makes the whole balance due much sooner. Take a $300,000 loan at 7.24% with payments of $2,044 set on a 30-year schedule but due after seven years. Over those 84 payments you pay $171,738, yet $274,447 — about 91% of the original loan — is still owed in one lump sum. Interest-only loans can end the same way — see the interest-only mortgages guide.
Borrowers usually plan to sell or refinance before the balloon is due, but that can fail if the home loses value, rates rise or your income drops. If you can’t pay, you could lose the home.
Rules that limit balloons
Balloon payments aren’t allowed in a Qualified Mortgage, with limited exceptions for certain small lenders. High-cost mortgages generally can’t include them either. A loan with a balloon must say so in the Loan Terms table on page 1 of the Loan Estimate, with the amount and due date, so check that line before you sign. The amortization schedule of a fully amortizing loan shows the balance reaching zero instead.
Sources
- Freddie Mac Primary Mortgage Market Survey — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- CFPB: What is a balloon payment? When is one allowed?
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.