Does Rental Home Financing Allow Seller-Held Financing or Second Mortgages?
No, Rental Home Financing does not allow seller-held financing, seller carryback notes, or second mortgages on properties included in our blanket loan portfolios. Our loans require a first-lien position on all collateral properties with no subordinate debt attached to any asset in the pool.
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First-Lien Required
All properties in the blanket pool must have clean first-lien status with no subordinate debt.
Negotiate Lower Price
Instead of a seller note, negotiate the equivalent discount into the purchase price.
Cash-Out Alternative
Refinance free-and-clear properties to generate acquisition capital.
Portfolio Consolidation
Roll existing individually-financed properties into a blanket loan to free up equity.
This restriction exists because our blanket mortgage loans are underwritten based on the combined value and cash flow of the entire portfolio. Adding junior liens to individual properties within the collateral pool creates additional risk exposure and complicates the lender's security position. Secondary market investors who ultimately purchase these loan pools require clean first-lien collateral without subordinate encumbrances.
Secondary market investors require clean first-lien collateral without subordinate encumbrances
What Are the Alternatives to Seller Financing?
If you are acquiring properties where the seller is offering to carry back a portion of the purchase price, here are some strategies to consider:
- Negotiate a lower purchase price -- rather than structuring a seller note, negotiate the equivalent discount into the purchase price
- Use cash reserves for the gap -- our programs allow up to 80% LTV, so your 20% equity contribution covers the balance
- Cash-out refinance -- if you already own properties free and clear, a cash-out refinance through our program can provide acquisition capital
- Portfolio consolidation -- roll existing individually-financed properties into a blanket loan to free up equity for new purchases
If you have a specific acquisition scenario involving seller financing, call our team to discuss structuring options. While we cannot allow a seller note to remain on a property within our collateral pool, there may be other ways to structure the transaction that work for both parties.
Seller Financing Alternatives
- Negotiate a lower purchase price instead of structuring a seller note
- Use cash reserves for the 25% equity contribution required
- Cash-out refinance existing free-and-clear properties for acquisition capital
- Consolidate individually-financed properties into a blanket loan to free equity
Need Help Structuring Your Acquisition?
Our lending specialists can help you find the right financing approach for your portfolio, even without seller carryback options.
Explore our blanket and multifamily loan programs for purchase, refinance, and cash-out options.