Land records · Parcel maps · October 7, 2026
What Is a Purchase Money Mortgage? Priority and Uses
What is a purchase money mortgage? A loan used to buy the property it secures, from a lender or seller, often with special lien priority.
What is a purchase money mortgage? A purchase money mortgage is a mortgage or deed of trust that secures a loan used to buy the very property it encumbers. Most home loans used to buy a house are purchase money loans. The term is also used specifically for seller financing, where the seller takes a mortgage from the buyer for part of the price instead of being paid entirely in cash. Purchase money mortgages receive special treatment in many states, including strong lien priority and, in some states, protection for borrowers against deficiency judgments. This page is general land-records background, not legal advice.
Types
| Type | Lender |
|---|---|
| Bank or lender purchase money loan | Third-party lender funds the purchase |
| Seller purchase money mortgage | Seller finances part of the price |
| Second purchase money loan | Covers part of the down payment |
Priority advantages
A purchase money mortgage generally takes priority over judgment liens and other claims against the buyer that existed before the purchase. The idea is that the buyer never owned the property free of the lender’s money, so earlier creditors of the buyer should not jump ahead. See what is lien priority.
Seller financing
In a seller-financed sale, the seller conveys title by deed, and the buyer signs a promissory note and a mortgage or deed of trust back to the seller. This differs from a land contract, where the seller keeps title until paid. In Texas, sellers often reserve a vendor’s lien as well.
Anti-deficiency protections
Some states protect borrowers from personal liability beyond the property for certain purchase money loans. California, for example, bars deficiency judgments on many purchase money loans for owner-occupied homes. Other states have different rules or none.
Recording
Purchase money mortgages are recorded in the county land records, usually immediately after the deed so they attach as the buyer takes title. Some forms include a statement that the mortgage is a purchase money mortgage. See what is a deed of trust.
Seller financing considerations
- Federal and state laws regulate some seller financing, especially to consumers.
- Sellers should check the buyer’s credit and require insurance.
- An existing mortgage on the property may have a due-on-sale clause.
- Sellers need to handle servicing, taxes, and payoff records.
Releasing the mortgage
When paid, the holder records a satisfaction or release. Seller-held mortgages are sometimes forgotten, leaving clouds on title years later.
Example
A buyer purchases a $250,000 home with a $200,000 bank loan and a $25,000 seller-financed second mortgage. Both are purchase money mortgages because both funded the purchase. If the buyer had an old judgment against them in that county, both mortgages would generally take priority over the judgment lien on this home. The seller’s second mortgage should be recorded right after the bank’s, and the seller should keep good records and record a release when the buyer pays it off.
Bottom line
A purchase money mortgage secures a loan used to buy the property, from a lender or the seller. It often gets priority over the buyer’s earlier creditors and, in some states, deficiency protection. Seller-financed versions require careful documentation and release when paid. Find county recorders via the Platbookmapper map.
What is a purchase money mortgage FAQ
What is a purchase money mortgage?
A mortgage securing a loan used to buy the property.
Is my home loan a purchase money mortgage?
If you used it to buy the home, generally yes.
What is seller purchase money financing?
The seller lends part of the price and takes a mortgage.
Do purchase money mortgages have priority?
They often take priority over the buyer’s earlier creditors.
Can a lender get a deficiency on a purchase money loan?
Some states restrict deficiencies for certain purchase money loans.