First Mortgage
Definition and meaning of First Mortgage in real estate.
A first mortgage is the primary home loan secured by a real estate property, holding the highest lien priority over all other voluntary claims on the property. In the event of a foreclosure or sale, this loan must be paid off first before any secondary financing or junior liens receive funds.
In more detail
The priority of a first mortgage is typically established by the date and time it is recorded in local public land records. Lenders require this senior position because it minimizes their financial risk if the borrower defaults. Home buyers usually take out a first mortgage to cover the bulk of a home's purchase price, and they may later add secondary loans like home equity lines of credit.
If the property goes into foreclosure, secondary lenders only receive payment if there are proceeds left over after the first mortgage is fully satisfied.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Lien priority | Primary or senior position |
| Established by | Recording date in public records |
| Watch out for | Unpaid property tax liens, which can take priority even over a first mortgage |
A homeowner decides to sell their property. The proceeds from the sale are first used to pay off their primary home loan, which holds the first mortgage position, before any remaining money goes to pay off a secondary home equity loan.
Frequently asked questions
Can you have more than one first mortgage on a property?
No, a property can only have one first mortgage because it represents the primary debt with the highest payment priority.
Does a first mortgage always get paid first in foreclosure?
In most cases yes, but government tax liens and certain municipal assessments typically take priority over a first mortgage regardless of when they were recorded.