A balloon loan is structured with low periodic monthly payments calculated on an extended amortization schedule (e.g. 30 years), but with a maturity date set much sooner (e.g. 5 or 7 years).
At maturity, the entire remaining principal balance becomes due immediately in a single lump-sum "balloon payment". Borrowers typically plan to sell the asset, refinance the debt into a traditional amortized loan, or pay off the balance before the balloon maturity deadline.