A straight purchase occurs in a transaction for a newly built home. In this scenario, the buyer provides a down payment to the home builder before the home builder ever breaks ground. The buyer will pay the balance of the purchase price when the home is completed and when the two sides finalize the official home sale. This type of transaction allows the home builder some funding and security to get started on the home. The straight purchase differs from a traditional purchase in a number of ways. Even though the home buyer will make a down payment on a mortgage in a traditional purchase, that down payment goes to the bank. In a straight purchase scenario, the home builder receives the down payment before a mortgage is even finalized in most cases. These purchases are typically completed by buyers who have significant liquidity.
