What Is a Balloon Payment?

Short answer

A balloon payment is a large, one-time payment due at the end of a loan, generally more than two times the loan's regular monthly payment (CFPB, as of October 2026). Balloon loans usually run 5 to 10 years instead of 15 to 30. Most Qualified Mortgages cannot have one, so today balloons show up mainly in business-purpose loans like hard money, bridge and commercial.

Definition

The remaining balance that comes due in one payment at maturity because regular payments did not fully pay off the loan. Florida's statute uses the same test: a final payment greater than twice the regular periodic payment.

Worked example

Example only, not a quote: a $300,000 loan at 8% with payments figured on a 30-year schedule, due in 7 years. The monthly principal and interest is about $2,201. After 84 payments the balance is about $277,432, all due at once, about 126 times the regular payment. An interest-only hard money loan is starker: $250,000 at 11% for 12 months is about $2,292 a month in interest, then the full $250,000 is due.

Balloons and Qualified Mortgages

Per the CFPB's ATR/QM compliance guide, a General QM may not have a balloon payment, interest-only payments, negative amortization or a term over 30 years. The narrow exception is a Balloon-Payment QM from a small creditor that operated in a rural or underserved area the prior year. It must have:

• A fixed interest rate
• A term of 5 years or longer
• Regular payments that would amortize the loan over 30 years or less

On every consumer Loan Estimate, Regulation Z 1026.37(b)(5) requires a yes or no answer to "Balloon Payment" in Loan Terms, with the amount and due date if yes.

Where you see balloons today

• Hard money and fix-and-flip: short, often interest-only terms, paid off by a sale or refinance
• Bridge loans: cover the gap until a sale closes
• Commercial loans: often amortized over a long schedule with a balloon at 5, 7 or 10 years

These are business-purpose loans. The CFPB warns that if you cannot pay or refinance the balloon, you could lose the property, so plan the exit before you sign.

In South Florida

F.S. 697.05 requires a balloon mortgage to carry the legend "THIS IS A BALLOON MORTGAGE" with the balance due at maturity, at the top of the first page and above your signature. If the lender skips it, the maturity date is extended and you can keep making regular payments and prepay without penalty. Many loans are exempt: first mortgages, terms of 5 years or more, interest-only loans, loans over $500,000, loans with a federal Truth in Lending disclosure, and seller financing. So it mostly protects borrowers on short private second mortgages.