What financing situation involves a buyer receiving assistance with the down payment in exchange for equity?

The financing situation in which a buyer receives assistance with the down payment in exchange for equity is known as a shared equity loan. This arrangement allows a buyer to secure funding for part of their down payment by bringing in a third party, often an investor or a government program, to share in the homeownership experience. In return for the investment, the third party typically receives a portion of the future appreciation of the property's value, effectively granting them equity in the home.

This kind of financing can be particularly valuable for first-time homebuyers or those who may not have sufficient funds saved for a traditional down payment. By participating in this model, buyers can enter the housing market more easily while simultaneously easing the financial burden of acquiring a home.

In contrast, conventional loans, reverse mortgages, and graduated payment mortgages do not involve sharing equity in exchange for down payment assistance. Conventional loans function as standard mortgage products typically based on the borrower's creditworthiness and financial stability. Reverse mortgages are designed for older homeowners to access their home equity while continuing to live in the home, and while graduated payment mortgages provide a payment structure that increases over time, they do not involve equity sharing. Thus, the correct choice in this context is clearly the shared equity loan.