A first mortgage is the loan secured against a piece of real estate that holds the senior, or first-priority, claim on that property. If the property is sold, refinanced, or taken through foreclosure, the lender holding the first mortgage is paid from the proceeds before any lender holding a second mortgage, home equity line, or other junior claim, which is why it is also called the senior lien.
Most homebuyers only ever take out a single mortgage, which is automatically a first mortgage by default since no other loan is secured against the property. The term becomes relevant once a second loan, most commonly a home equity loan or home equity line of credit, is added against the same property, at which point the original loan's seniority determines the order in which lenders are repaid if something goes wrong.
First mortgage in plain terms
Think of a property's debts as a line at a cash register when there isn't enough money to pay everyone. The first mortgage lender stands at the very front of that line. If the home is sold for less than the combined debt against it, the first mortgage gets paid first, in full if possible, and only whatever is left goes toward the second mortgage or any other claim behind it. This is why first mortgages are considered lower risk than second mortgages, and generally carry a lower interest rate as a result.
How priority is established
Lien priority is generally determined by when a mortgage is officially recorded with the relevant land registry or county recorder's office, not by which loan was applied for first in conversation with a bank or other lender. A loan recorded earlier in time typically has priority over one recorded later, which is why lenders insist on title searches and prompt recording before releasing funds, to confirm their loan will actually hold the priority position they expect.
Refinancing and first mortgages
When a homeowner refinances a first mortgage while a second mortgage already exists, the new first mortgage does not automatically keep its senior position unless the second mortgage lender agrees in writing, through a document called a subordination agreement, to remain in a junior position behind the new loan. Lenders issuing second mortgages routinely require this step as part of underwriting a new first mortgage, since without it the refinanced loan could unexpectedly end up behind the second mortgage in priority.
Why lien position matters to borrowers
Lien position affects not just lenders but borrowers: because first mortgage lenders bear less risk, first mortgages are easier to qualify for, allow higher loan-to-value ratios, and are offered at better rates than subordinate loans on the same property. Borrowers considering a second mortgage or home equity line should understand that doing so does not change the interest rate or terms of an existing first mortgage, but it does add a junior claim that will be repaid only after the first mortgage is satisfied.
First mortgage in foreclosure
If a borrower defaults and the lender pursues foreclosure, the proceeds of a forced sale are distributed strictly by lien priority after the costs of the sale itself are covered. The first mortgage lender is paid in full, up to the amount owed, before any payment reaches a second mortgage holder or other junior creditor. If the sale proceeds are not enough to cover even the first mortgage balance, junior lienholders typically recover nothing, which is one reason second mortgages and home equity lines carry meaningfully higher interest rates than first mortgages on the same property: the junior lender is absorbing most of the loss risk in a declining market.
Government-backed first mortgages
In the United States, a first mortgage can be a conventional loan or one insured or guaranteed by a government program, such as those administered through the Federal Housing Administration or the Department of Veterans Affairs. These programs generally apply only to a borrower's first mortgage; a second mortgage layered on top of a government-backed first mortgage is usually a separate, conventional loan, subject to its own underwriting and typically with a higher rate reflecting its junior lien position.