Under what condition may a balloon payment feature be included in a high-cost home loan?

A balloon payment feature in a high-cost home loan can be included under specific conditions that ensure the borrower is capable of managing their payment obligations. One of the acceptable circumstances is when the loan schedule accounts for seasonal or irregular income. This is significant because it acknowledges that some borrowers may have income streams that vary throughout the year, allowing them to make larger payments at times when their income peaks and potentially smaller payments when it is lower.

By accommodating these fluctuations, the loan can be structured in a way that is more manageable for the borrower, thereby reducing the risk of default. This consideration highlights the importance of flexibility in loan agreements, especially in situations where a borrower's financial situation may not be consistent.

On the contrary, relying solely on a borrower’s stable income or agreeing to additional fees without regard to their payment ability may not genuinely address the risk involved with balloon payments. Additionally, tying the presence of a balloon payment to a loan term of less than one year does not align with the regulations and requirements governing high-cost home loans, which seek to protect borrowers and promote responsible lending practices.