A balloon mortgage is a type of mortgage that still has a balance due on maturity date. The last payment (balloon payment) of a balloon mortgage is usually substantial in size. The balloon mortgage doesn't amortize fully over the term of the mortgage, instead using a amortization schedule of longer term mortgage. For example if you get a balloon mortgage of $100,000 for 10 years and you amortize it using a 25 years amortization schedule instead, you'll end up paying less monthly (compared to if you amortized the mortgage over 10 years), however a big chunk of your mortgage principal will be due back on the maturity date.
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