Which description best fits a purchase money mortgage arrangement?

• A. Bank lends full amount
• B. Tenants pay monthly
• C. Seller accepts a down payment and provides mortgage on the balance
• D. Government pays

Answer: (C)

A purchase money mortgage is when the seller acts as the lender to finance part of the buyer’s purchase. The buyer provides a down payment, and the seller loans the remaining balance, with the loan secured by a mortgage on the property. This arrangement—seller financing of the balance after the buyer’s down payment—is what the description is capturing. It’s typically used when the buyer can’t obtain traditional financing from a bank, and it means the seller holds the lien and the buyer makes payments to the seller over time. The other scenarios describe bank financing (lending the full amount), renting (tenants paying monthly), or an outside party paying (government), none of which match the nature of a purchase money mortgage.