Purchase-Money Mortgage

A purchase-money mortgage (PMM) is a type of mortgage loan that is used to finance the purchase of a home. The lender provides the borrower with a loan, which is secured by the property being purchased. The borrower then makes monthly payments to the lender, which are used to repay the loan principal and interest.

There are two main types of purchase-money mortgages: conventional and government-backed. Conventional PMMs are not backed by the government, and the terms of the loan are set by the lender. Government-backed PMMs are backed by the government, and the terms of the loan are set by the government agency that guarantees the loan.

The most common type of government-backed PMM is the Federal Housing Administration (FHA) loan. FHA loans are available to first-time homebuyers and those with low credit scores. The FHA sets the maximum loan amount that can be borrowed, and the interest rate is set by the lender.

Another type of government-backed PMM is the Veterans Administration (VA) loan. VA loans are available to veterans and active-duty military members. The VA sets the maximum loan amount that can be borrowed, and the interest rate is set by the lender.

Purchase-money mortgages can be a good option for borrowers who are looking to purchase a home. However, it is important to compare different loan options before choosing a PMM.