A purchase loan is a specific type of loan used to buy a property where the property itself acts as security collateral. Unlike a refinance which replaces an existing loan a purchase loan is what you use to become a property owner in the first place. When a buyer uses a purchase loan, the lender finance the majority of the home purchase price, and the buyer pays the rest upfront as a down-payment. The buyer then pays the lender back over a set period (usually 15 or 30 years) with interest.