What is a variation of a pledged account mortgage where the lump sum comes as an incentive from a builder or family member?

A buydown is a financing technique used in real estate transactions where the interest rate on a mortgage is reduced for some or all of the initial years of the loan. This reduction is often funded by the seller, builder, or a family member as an incentive for the buyer. The lump sum provided as part of this arrangement typically helps lower the monthly payments, making the mortgage more affordable in the early years.

In the context of the options, the buydown directly relates to the scenario where incentives such as a lump sum are given to help facilitate the purchase. By contrast, a purchase money mortgage refers specifically to a mortgage taken out to buy a property, typically without the added incentive structure. A wrap-around mortgage combines new financing with existing loans and does not directly involve a lump sum incentive as described. Lastly, a reverse mortgage operates on a fundamentally different premise, allowing homeowners to access their equity without making monthly payments, and is intended for seniors.

Ultimately, the buydown best describes the situation of receiving funds from a builder or family member to incentivize home purchase, ultimately benefiting the buyer with reduced mortgage payments.