What is it called when a lump sum is due because the amortization schedule did not pay out the mortgage?

When a lump sum becomes due at the end of the mortgage term because the amortization schedule did not pay off the mortgage, this is known as a balloon mortgage. A balloon mortgage typically features lower monthly payments initially, but at the end of the loan term, a large final payment is required. This final payment, or "balloon payment," is significantly larger than the preceding payments and reflects the unpaid principal balance that remains due after the shorter amortization period.

In contrast, a fixed-rate mortgage provides a consistent interest rate and payment throughout the life of the loan, ensuring that the mortgage is fully paid off by the end of the term. An adjustable-rate mortgage features interest rates that may change periodically based on market conditions, but it also includes an amortization schedule designed to fully amortize the loan by the end of the term. An interest-only mortgage allows for lower payments initially by only requiring interest to be paid for a specified period, but it typically culminates in some form of principal payment due, not a lump sum like a balloon payment. Thus, the nature of the balloon mortgage distinctly emphasizes the occurrence of a lump sum payment due at the end of the loan.