What is the Balloon Payment line on a Loan Estimate?

Updated November 2026 · Every dollar figure is an illustrative example, not a quote

The Balloon Payment line in the Loan Terms table on page 1 says whether the loan ends with one large payment of the remaining balance instead of being paid off by the regular payments, and on nearly every standard mortgage the answer is NO. Where it is YES the form must say how much and when, for example 'You will have to pay $150,000 at the end of year 7,' and you should know how you will pay or refinance it before you sign.

Where it is on the form

Page 1, the Loan Terms table, as Balloon Payment under 'Does the loan have these features?' with YES or NO. A YES carries the amount and the year. Prepayment Penalty is the line above it. On a loan with a balloon, page 1's Projected Payments table also shows the final payment in its last column.

Illustrative rangeUsually none; where present, often the bulk of the original loan due in 5–15 years

A balloon loan has payments set as if it ran 30 years but a term of, say, 7 or 15 years, so most of the balance is still owed when it ends. On a $380,000 loan amortized over 30 years at 6.625%, about $344,000 would still be due at the end of year 7. Balloons are uncommon on home loans today; they appear mainly on some small-lender portfolio loans, seller financing and certain construction or bridge loans.

Paid toThe lender, at the balloon date

Can you shop for it?Not a service

Can it change at closing?Not a fee: There is no dollar amount to protect

Why balloons exist: a lender that keeps loans on its own books may not want to be locked into a 30-year rate, so it lends for 7 or 10 years at a lower rate and expects to be repaid or to refinance you then. The risk is all yours: if rates are higher, your income is lower or the home is worth less when the balloon comes due, refinancing may be hard, and the lender is owed the balance regardless.

The federal rules behind the box: a qualified mortgage generally cannot have a balloon, with a narrow exception for small lenders in rural or underserved areas. That is why a balloon on an ordinary home loan from an ordinary lender is unusual enough to ask about. A balloon is not the same as an adjustable-rate mortgage, where the rate changes but the loan still pays off over its term, nor an interest-only period, which the form discloses separately in the Projected Payments table.

Can you shop for it?

Not a service, but a feature to understand. If a lender's quote has a balloon, ask what the fully amortizing alternative looks like and why the balloon version is being offered. Most borrowers are better served by a loan that pays itself off.

Can it change between the Loan Estimate and closing?

Not a fee. It is a term of the loan; adding or changing a balloon is a change to the loan itself and needs a revised Loan Estimate. It cannot appear on the Closing Disclosure if the Loan Estimate said NO.

Questions to ask the lender

Does this loan have a balloon payment? If YES, how much and when, and how do you expect me to pay it?
What does the same loan look like fully amortizing over 30 years?
Is there any written commitment to refinance the balloon when it comes due?

Red flags

A YES in the box on a loan sold to you as a standard 30-year mortgage.
A balloon with a promise, in words only, that 'we will just refinance it then'.
A low payment that turns out to be low because the loan does not pay itself off.

Questions people ask

Is a balloon payment bad?

It is a risk, not a cost. The loan is cheaper month to month but a large balance comes due on a fixed date, and refinancing then depends on rates, your finances and the home's value at that time. For most home buyers a loan that pays itself off is the safer choice.

What is the difference between a balloon loan and an ARM?

An ARM's rate changes over time but the loan still pays off over its term. A balloon loan's payments do not pay it off; a lump sum is due at the end. The Loan Estimate discloses both, in different places: the balloon on page 1's Loan Terms, an ARM's rate changes in the Adjustable Interest Rate table.

Do normal mortgages have balloon payments?

No. FHA, VA, USDA and conventional conforming loans pay off over their term. Balloons appear mainly on some portfolio loans from small lenders, seller financing and certain short-term loans. The box on page 1 is the place to check.

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Every dollar figure on this page is illustrative. Fee ranges are general observations, not a survey or a quote, and are not a loan offer, approval, commitment to lend, or Loan Estimate. Your actual rates and fees depend on qualification with lenders, your state and county, and your closing date. The tolerance rules described are the federal TRID rules in general terms; the rule itself and your own Loan Estimate and Closing Disclosure decide how it applies to your loan. comparemyloan does not negotiate with lenders, lock rates, or take loan applications.