Negative amortization occurs when your loan balance increases due to insufficient payments. While reverse amortization is when the loan balance grows over time. Reverse amortization typically applies to certain types of loans, such as reverse mortgages, where the borrower receives payments from the lender instead of making payments. On a reverse mortgage, interest payments are added to their original principal balance. However, as the property increases in value, a loan-to-value (LTV) of 55% maintains a negative-equity guarantee while they carry this increasing balance loan.