The correct answer is B, Balloon mortgage. A balloon loan is not fully amortized over its contractual payment period. Regular installments are calculated in a manner that leaves a significant principal balance outstanding at maturity. That remaining balance becomes due in a large final payment, known as the balloon payment.

A fully amortized mortgage is structured so scheduled principal-and-interest payments reduce the loan balance to zero by the final regular payment.

A reverse mortgage serves a different purpose, generally allowing qualifying older homeowners to convert equity into loan proceeds subject to program requirements.

A blanket mortgage covers more than one parcel or property under a single security instrument and is commonly associated with subdivision or portfolio financing.

Balloon financing can produce lower periodic payments than a fully amortizing loan with the same maturity but creates refinancing and maturity risk because the borrower must have sufficient cash or replacement financing when the balloon becomes due.

Massachusetts Board financing curriculum includes mortgage structures, amortization, loan terms, and repayment methods.

Study Guide Reference: Financing — Mortgage Types; Amortized versus Balloon Loans.