To pay for a second-hand pre-owned home, buyers typically use mortgage loans, cash purchases, or financing through private lenders. Mortgages, often requiring a down payment of 5-20%, are the most common method, with fixed or adjustable rates depending on creditworthiness. Cash purchases avoid interest but demand significant upfront liquidity. Private lenders or peer-to-peer platforms may offer alternative financing for buyers with poor credit or unique property situations.

Mortgage financing dominates due to its accessibility and structured repayment terms, which align with long-term homeownership goals. According to the Federal Housing Finance Agency (FHFA), 95% of U.S. home purchases in 2022 involved mortgages, with average down payments averaging 13% for repeat buyers. Adjustable-rate mortgages (ARMs) accounted for 30% of loans, appealing to buyers seeking lower initial rates. The Consumer Financial Protection Bureau (CFPB) notes that buyers with credit scores above 740 secure lower interest rates (e.g., 4.0-4.5% for 30-year fixed loans) versus those below 620 (7.0-8.5%). Pre-owned homes, which constitute 85% of U.S. residential sales, often require less upfront investment than new constructions, as their prices typically lag behind new-home appreciation by 5-10% annually (Zillow, 2023). Cash purchases, while less common (12% of transactions), enable faster closings and avoid mortgage insurance costs, saving buyers up to $5,000 on average. However, limited savings accounts or investment portfolios may necessitate hybrid approaches, such as partial cash down payments paired with mortgages. Data from the National Association of Realtors (NAR) underscores that 68% of buyers finance purchases through conventional lenders, highlighting the reliance on institutional financing despite rising cash buyer activity. This balance reflects market stability, as mortgage-backed securities and government-backed loans (e.g., FHA, VA) remain critical to sustaining liquidity in the pre-owned housing sector.