What type of loan is specifically meant for the purchase of residential property where the property serves as collateral?

A purchase money mortgage is a specific type of loan designed for the purchase of residential property, whereby the property itself serves as collateral for the loan. This kind of mortgage enables the buyer to finance the acquisition of a home while allowing the lender to secure their investment with the property in case of default. The unique characteristic of a purchase money mortgage is that it is created at the time of the property purchase, distinguishing it from other loan types.

For instance, when a buyer approaches a lender to finance a home purchase, the lender provides funds, and in return, the borrower pledges the property as collateral. This process not only facilitates the transaction but also ensures that the lender has a tangible asset backing the loan.

In contrast, other options don't serve the same purpose. A refinance loan is focused on restructuring an existing mortgage rather than facilitating a new property purchase. A home equity line of credit taps into the equity of an already owned property and does not directly relate to buying a home. Personal loans are unsecured loans that do not use a specific property as collateral, making them unsuitable for the context of home purchasing. Thus, a purchase money mortgage is unequivocally the appropriate answer regarding loans specifically intended for buying residential property.