What is a Purchase Money Mortgage?

A Purchase Money Mortgage is specifically designed as a financing arrangement where the seller provides a loan to the buyer to cover a portion of the purchase price of the property. This type of mortgage allows the seller to take back part of the purchase price, which can facilitate the sale especially in situations where the buyer may not have enough funds for a down payment or can't qualify for a traditional mortgage.

In this arrangement, the seller effectively acts as the lender, and the buyer agrees to pay back the loan amount over time, often along with the formal mortgage on the property. This is beneficial for both parties: the seller can secure a quicker sale while the buyer has access to necessary funds.

In contrast to the other options, choices like a mortgage given by a bank to a seller directly or a mortgage where the buyer provides financing might imply traditional lending practices, which are not characteristic of this concept. Additionally, a mortgage offered by the government is related to specific assistance programs rather than the direct transaction between a buyer and a seller that the Purchase Money Mortgage represents.