finance
purchase-money mortgage
A purchase-money mortgage is a loan used to buy the property that secures it. The term is often used specifically for seller financing, in which the seller accepts a note and mortgage from the buyer for part of the price instead of cash. A purchase-money mortgage generally has priority over other liens arising through the buyer. It can be a first or second mortgage.
- Exam tip
- Exams typically present a purchase-money mortgage as seller financing, where the seller acts as the lender and receives payments.
- Example
- A buyer pays $50,000 down and the seller carries back a $150,000 purchase-money mortgage for the rest of the $200,000 price.
Related terms & state variants
Sources
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Last verified: 2026-10-23