Balloon Payment
A large principal payment due at the end of a note when the amortization schedule is longer than the loan term.
Last updated September 5, 2026
A balloon is common on seller notes and some commercial mortgages: payments are calculated as if the loan lasted 10–25 years, but the remaining balance is due in three to seven years. The buyer must refinance, pay cash, or renegotiate when the balloon hits. Missing a refinance plan is a solvency risk even if monthly coverage looks fine today. The purchase agreement and note should state the balloon date in plain numbers.