In real estate finance, a purchase money mortgage is a security instrument given by a buyer to a seller to secure payment of all or part of the property’s purchase price. Instead of obtaining financing from a third party lender, the buyer borrows directly from the seller.
This type of financing is commonly used when a seller agrees to carry back a portion of the purchase price. The purchase money mortgage creates a lien on the property and establishes the buyer’s obligation to repay the seller under the agreed terms.
