People who expect to stay in their home for only a short period of time may opt for a balloon mortgage. It comes with low monthly payments and a much lower overall cost since it is paid off in a few years rather than in 20 or 30 years like a conventional mortgage.
Others may intend to stay in their homes and refinance before the balloon payment is due. They may be counting on a higher income by then, and they are sure they will be able to handle a larger monthly payment. Or they may foresee a fall in interest rates.
Another type of homebuyer who might find the balloon mortgage appealing is a professional whose primary income comes as a year-end bonus. If that bonus is a certainty, it allows the buyer to get into the home earlier.