With a Balloon Home Loan, the term of the loan is usually set at 3, 5, 7 years. However, the monthly payment is calculated as if the loan were to be paid off in 30 years. Thus, the monthly payments during the 3, 5, 7-year term are lower than they would have been if the loan was to fully amortize by the maturity date. Instead, the unpaid principal amount is due at maturity, along with any unpaid accrued interest. This larger final payment is referred to as the "balloon payment."

Quite often, refinancing an expiring balloon loan with a new balloon loan has offered long-term savings over other loan products.

VAMortgage.com loan professionals will work with you to determine whether a balloon payment loan is right for you.