What is the financing method called when a seller offers to cover the gap between the loan amount and the sale price?

The financing method where a seller offers to cover the gap between the loan amount and the sale price is known as a purchase money mortgage. This arrangement is beneficial for buyers who may not qualify for the total amount required to purchase the property. In a purchase money mortgage, the seller effectively acts as a lender to the buyer, allowing the buyer to secure a loan for the amount needed minus the seller's concession.

This method is often used in scenarios where traditional financing options are limited, making it a viable alternative for buyers. The seller may be more inclined to offer this type of financing in order to facilitate the sale, especially in a competitive market. It allows the seller to attract potential buyers who may have difficulties obtaining the full financing from a bank. Thus, sellers can not only achieve a sale but also earn interest on the financed portion.

Other choices do not accurately reflect this process. An equity mortgage typically involves borrowing against the equity in a property, while a promissory note is a document that serves as a written promise to repay a loan. A seller-insured loan is not a commonly recognized term in real estate financing. Therefore, purchase money mortgage is clearly the correct term for the situation described.