Loan purchase, or a Purchase-Money Mortgage, is an option for buyers with struggling credit to buy a home. While this option is available, there are downsides that should be considered before moving forward, and our goal is to help you make an educated decision on whether or not this is the right choice for you.

There are many benefits for sellers to offer a purchase mortgage, including selling at a higher price, monthly cash flow, and a higher interest rate than they would earn investing the money in other low-risk investment options.

For borrowers using this loan, they benefit from lower closing costs, flexible down payments and guidelines, faster closing, and the ability to buy a home when otherwise unqualified. However, there are also risks associated, such as foreclosure risk when the seller has the right to foreclose on the property, higher monthly payments, higher interest rates, and balloon payments when the sellers lend the buyers money for the short term in the hopes that they will refinance the loan with a traditional bank in a year or so after they fix their credit and/or have the money to afford it.