Table fundingfor private lenders.

What is table funding?

Table funding is a way to close a loan in your own name while another party’s money funds it. At the closing table, the capital source wires the loan amount, the borrower signs with you as lender, and the note and mortgage are assigned to the capital source at closing, so it owns the loan from day one.

Federal mortgage rules define it as “a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds” (12 CFR 1024.2). For a private lender, it answers a simple problem: you can find and underwrite more good loans than your own capital can hold. You close without any of your own capital in the loan and without drawing on a credit line, and you earn your origination points at closing and, with Lender Capital, a yield spread for the life of the loan.

Table funding meaning, in plain English

The table funding meaning is in the name: the loan is funded “at the table” by the party that will own it, rather than funded by the originator and sold later. Think of a closing as three moves: the borrower signs, money is wired to the settlement agent, and the loan is recorded in someone’s name. In a normal closing, the lender of record is also the one wiring the money. In a table-funded closing, those roles split:

• You are the lender of record. Your name is on the commitment, the note and the mortgage or deed of trust, and you deal with the borrower.
• The capital source wires the loan amount to the title company or closing attorney.
• The loan is assigned to the capital source at closing, so it owns the loan from the moment it closes.

A table funded loan, then, is a loan that closes in the originator’s name, is paid for by someone else at settlement and is assigned to that funder immediately. The CFPB’s commentary puts it the same way: the debt is “initially payable by its terms to one person, but another person provides the funds for the transaction at consummation and receives an immediate assignment of the note” (CFPB, Regulation Z § 1026.36). A table-funded closing is the settlement itself, set up so the funder’s wire, the borrower’s signatures and the assignment all happen together.

How does table funding work, step by step?

Here is how a table-funded, first-lien, business-purpose loan typically moves from application to closing.

1. You originate and underwrite the loan. Nothing changes at the front end: you take the application, order the appraisal and title, review the borrower’s experience and the property, and set your terms: loan amount, note rate, points, term and any holdback or interest reserve.
2. You submit the full file before closing. The capital source has to be comfortable owning the loan, so it reviews what you reviewed: the appraisal, the borrower file, the title commitment, insurance, any scope of work and your term sheet. A complete loan file is the biggest factor in how quickly a capital source can decide.
3. The capital source commits. If the loan fits its criteria, it commits to fund at the agreed terms. That commitment is what makes table funding different from a sale: the owner is decided before the loan exists.
4. Closing instructions are set up for table funding. The settlement agent needs to know who is wiring the funds, the exact amount and how the loan is assigned. Typical documents include closing instructions naming the funding party, an assignment of the mortgage or deed of trust, an endorsement or allonge transferring the note, and an agreement between you and the capital source covering servicing and representations about the loan.
5. Closing day. The capital source wires the loan amount to the title company or closing attorney, the borrower signs with you as lender, the settlement agent disburses and records the mortgage, and the assignment is delivered to the capital source. Your origination points are paid at closing, as on any loan.
6. After closing. The capital source owns the loan. In many arrangements you keep servicing it: collecting payments, handling draws and borrower questions, and reporting to the owner. The borrower keeps working with you, which is why lenders who want the next deal like this structure. See can private lenders keep the borrower when selling a loan.

When do lenders use table funding?

Lenders use table funding when they can originate more good loans than their own capital or credit lines can hold, when a warehouse line is unavailable or excludes their loan types, or when they want to keep their points, servicing and the borrower without carrying the loan. It suits loans with a complete file, since the capital source commits before closing.

Typical situations:

• Your capital is fully deployed and qualified borrowers are waiting.
• You can’t get a warehouse line, or yours excludes bridge, fix-and-flip or construction loans. See can’t qualify for a warehouse line?
• A loan is larger than you want to hold on your own balance sheet.
• You raise money investor by investor and it slows your closings.
• You want to keep servicing and the borrower rather than sell the loan after closing.
• You’d rather not borrow: no pledged loans, margin calls or personal guarantees for those loans.

Expect the capital source to review you as well as each loan; the lender due diligence checklist lists what is usually asked.

Table funding vs correspondent lending vs direct capital placement

All three let you close in your own name. The difference is whose money funds the loan at closing, and who owns it afterwards. A correspondent “funds the loan at settlement, and the loan is closed in the name of the lender correspondent,” then sells it to an investor (Fannie Mae Selling Guide). In table funding, the funder’s money closes the loan and the loan is assigned to it at once. Direct capital placement, the way Lender Capital works, is table funding with one capital partner, matched to each loan, funding the whole loan.

For the full correspondent picture, including delegated and prior-approval underwriting and repurchase terms, read correspondent lending for private lenders. If you are weighing loan acquisition programs against placement, see Roc Capital alternatives and Toorak Capital alternatives, or every capital source on one page at capital providers for private lenders.

Table funding is also not the same thing as white-label lending, though the two often travel together. White-label lending describes branding: you originate under your own name while another party provides the capital, and sometimes the guidelines or servicing. Table funding describes how the loan closes. See white-label lending.

Who is table funding for?

Table funding suits private lenders who originate more good loans than their own capital can hold, and who would rather not borrow against their loans to fund them. It is especially useful when:

• you can’t qualify for a warehouse line yet, or your line excludes the loans you make (many bank programs exclude bridge, construction and fix-and-flip loans);
• your capital is tied up in haircuts or existing loans and you are turning good borrowers away;
• you raise money investor by investor and it slows your closings;
• you don’t want personal guarantees, covenants or margin calls on a line.

It is not the right fit for every loan:

• When you want to hold the loan and keep all of its interest. Then your own capital or a line fits better, at least for those loans.
• When the loan doesn’t fit any capital source’s criteria. Table funding depends on a committed funder; a loan nobody will fund before closing can’t be table funded.
• When your timeline is too short for a review. The capital source has to see the full file before closing, so build that time into your process.

Many lenders use more than one tool: a line or their own capital for the loans they want to keep, and table funding for the rest. The guide to how private lenders fund more loans shows how the options fit together.

Table funding vs. warehouse line vs. selling the loan after closing

The difference that matters most is who funds the loan at closing, and therefore how much of your capital each loan ties up.

A warehouse line lends you part of each loan and you fund the rest, the haircut, from your own capital. Federal Reserve researchers describe warehouse draws as the loan balance minus a haircut, with margin calls, covenants and personal guarantees as standard features (Federal Reserve Board, 2018). Many bank programs are also built for residential mortgages: one bank’s published program lists bridge and construction loans as ineligible, says it does not finance hard money or fix-and-flip loans, and requires personal guarantees from anyone owning 10% or more of the company (Simmons Bank).

Selling after closing is a whole loan sale: you fund and carry the loan first, and the price is agreed after the fact. Lender Capital offers that too: you can sell whole loans you already funded to a capital partner and lend the capital again. Table funding is the earlier path, for loans that haven’t closed yet. See the warehouse line alternative page for every funding option side by side.

What do you earn on a table-funded loan?

How you earn depends on the arrangement, but two sources are common:

1. Origination points. The borrower pays points at closing. If a platform or intermediary is involved, a fee may come out of those points.
2. A yield spread. You set the borrower’s note rate. The capital source agrees to receive a lower rate, and the difference is your spread, earned while the loan is outstanding. Some arrangements pay the spread through servicing; others don’t include one at all, so ask.

With Lender Capital you keep your points and earn a yield spread: price the note above the capital partner’s rate and the difference is yours. The capital partner earns most of the interest, so your spread depends on pricing with enough margin above its rate. In exchange, your capital no longer limits how many loans you close, and the loan is owned by the capital partner from closing.

Is table funding legal for business-purpose loans?

Yes. Table funding is a common, lawful closing structure. Federal consumer mortgage rules address it directly: Regulation X defines it, and Regulation Z treats a table-funded originator as a loan originator for consumer credit (CFPB, Regulation Z § 1026.36). Business-purpose loans are generally exempt from those consumer rules (12 CFR 1024.5(b)(2); 12 CFR 1026.3(a)), but state lending, licensing, usury and disclosure laws can still apply, and they differ by state. This is general information, not legal advice: confirm the rules in each state you lend in with your counsel.

What should you check before your first table-funded loan?

1. Your loan documents allow assignment and say who services the loan after closing.
2. Your closing process can handle a third-party wire: closing instructions, the assignment, the allonge, and who delivers what to whom.
3. Your timeline gives the capital source enough time to review the full file before closing.
4. Your economics: your points, the placement fee, and the spread between your note rate and the capital source’s rate.
5. The borrower relationship: who services, who the borrower calls, and any terms about the capital source contacting your borrower.
6. Your licensing covers you as lender of record in each state, given that the loan is funded by someone else.

For definitions of the terms used here, see the glossary: table funding and loan assignment.

Frequently asked questions

What does table funding mean?

Table funding means a loan is funded at the closing table by a party other than the lender of record, and the loan is assigned to that party at closing. The originating lender closes in its own name without using its own capital or a credit line.

What is a table funded loan?

A table funded loan closes in the originating lender’s name, is paid for at settlement with another party’s money and is assigned to that party immediately. The funder reviews the file and commits before closing, so the originator never carries the loan.

Is table funding the same as correspondent lending?

No. A correspondent funds the loan at closing with its own money or a warehouse line, closes in its own name and sells the loan to an investor afterwards. In table funding, the funder’s money closes the loan and the loan is assigned to it at closing, so the originator never carries it.

Is table funding the same as white label lending?

Not exactly. White-label lending describes branding: you originate under your own name while another party provides the capital, and sometimes the guidelines or servicing. Table funding describes how a loan closes. Many white-label arrangements use table funding, but some buy loans shortly after closing instead.

Do I need a warehouse line to table fund loans?

No. The capital source’s money funds the loan at closing, so you don’t need a line or your own capital in the loan.

Is table funding legal for business-purpose loans?

Table funding is a common, lawful closing structure. Federal consumer mortgage rules address it for consumer loans; business-purpose loans are generally exempt from those rules, but state lending and licensing laws still apply. Ask your counsel about the states you lend in.

What does table funding cost with Lender Capital?

Lender Capital charges nothing unless a loan funds. When it does, Lender Capital’s placement fee is paid at closing from the origination points on that loan, at our published fee schedule: 1.00% of the loan amount up to $3,000,000 and 0.75% of the whole loan above that (0.75% and 0.50% for preferred lenders), with a $2,500 minimum. You keep the rest of your points and earn a yield spread above the capital partner’s agreed rate.

How does table funding work when institutional capital funds a loan at closing?

In Lender Capital’s direct capital placement, a capital partner reviews the full file and commits before closing, then wires the whole loan amount at the closing table. The borrower signs with you as lender, the loan is assigned to the capital partner at closing, and you keep servicing and the borrower relationship.

What are the costs and lender economics of table funding?

With Lender Capital, the lender pays a placement fee only when a loan funds, taken from origination points at closing, and keeps the rest of its points plus a yield spread above the capital partner’s agreed rate. No cash goes into the loan and there is no line or non-usage fee. See the worked example in the guide to table funding costs and lender economics.

Which companies provide table funding for bridge and fix-and-flip lenders?

Lender Capital provides direct capital placement for private and hard money lenders, including bridge and fix-and-flip lenders: one capital partner funds each whole loan at closing. Other providers run white-label or table funding programs with their own terms; our capital providers page compares the types and cites each provider’s public information.