What type of loan is specifically used to purchase a home or real estate?

The correct answer is a mortgage because it is a specific type of loan designed for the purpose of purchasing real estate. Mortgages are secured loans, meaning the property itself serves as collateral for the loan. This structure allows borrowers to access larger amounts of money than they may be able to with unsecured loans, like personal loans, since the lender has the assurance of recouping their investment through the collateral.

Mortgages typically come with defined terms regarding repayment schedule, interest rates, and an amortization period, making them ideal for long-term financing of real estate purchases. In contrast, personal loans, while flexible, do not specifically cater to real estate transactions and usually have higher interest rates and shorter repayment terms. Similarly, auto loans are exclusively meant for vehicle purchases and home equity loans leverage the equity in an existing property, not directly for purchasing real estate outright. Thus, the mortgage stands out as the appropriate choice for financing a home or real estate acquisition.