FAQs for Investors & Borrowers

FAQ for Investors

How do we pay our investors such high interest rates?

Simply put, a borrower may not be able to obtain a conventional loan from a bank or mortgage lender under today's tight credit lending environment.  In order to purchase or finance a real estate asset, a borrower will often turn to the private money market as a way to get the project financed.  As a result, a borrower is willing to pay a higher rate of interest in order to obtain a loan. Due to this scenario, we can pass this higher interest on to our lenders.

Who can invest with First Capital Funding?

An investor must either be a private investor, a family trust or a self-directed IRA. The State of Texas has investor suitability standards for these types of investments. An investor must have the financial resources to offset a possible gap in cash flow or loss on their overall investment. These standards include the following: A net worth (exclusive of home, furnishings, and automobiles) of $250,000 with an annual gross income of $65,000 OR a net worth (exclusive of home, furnishings, and automobiles) of $500,000 with no income requirements. Your investment may not exceed ten percent (10%) of your net worth (exclusive of home, furnishings, and automobiles).

Doesn't a lower credit score mean the loan is too risky?

We analyze the borrower's credit as part of the overall picture, not as the main criteria, as traditional banks do. In today's market especially, it is common to see a borrower with somewhat blemished credit, who can't obtain traditional financing. We always keep our loan-to-value under 75%, and as a key philosophy, we never approve a loan that we would not mind taking back in the foreclosure process although our goal is avoid this scenario by means of our underwriting due diligence.

Does First Capital Funding have a minimum investment amount?

Yes, the minimum starting investment is $50,000 per each property.

How soon do I receive payments on my investment and when does my check come?

If you fund a loan at the time it closes, you will receive a short interest check to cover your pro rata share of the daily interest collected from the borrower a few days following the closing date. From then on, you will receive your pro rata share of the loan payment after we receive it monthly from the borrower. Currently our loan payments are due by the 10th of the month, so investors typically receive their checks by the 15th of the month. If the borrower does not make a payment, a check is not sent, but we commence with the collection process and handle all the details associated with this process.

STANDARD DISCLOSURE: MORTGAGE PAPER SECURITIES ARE NOT RATED OR INSURED AGAINST LOSS AND MAY BE SUBJECT TO SIGNIFICANT RISKS THAT ARE FURTHER DESCRIBED IN THE GENERAL AND SPECIFIC OFFERING CIRCULARS. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. INVESTORS ARE URGED TO READ THE GENERAL AND SPECIFIC OFFERING CIRCULARS BEFORE INVESTING. WE INVITE AND WELCOME YOUR QUESTIONS.

FAQ for Borrowers

Is my credit score important?

Yes, we do place an emphasis on a borrower's credit score. Prior to the subprime meltdown, many hard moneylenders didn't place an emphasis on a borrower's credit score and that led to problems. At First Capital Funding, we are NOT in the business of loaning to own, so your credit score is important to us.

How fast can you close?

We make a decision on whether to do a deal within 24-48 hours. And then it typically takes another 9-10 days to close. In other words, we usually can close in 10-12 days from the receipt of the loan request.

Do you fund raw land deals?

No, but we will consider an equity-based structure.

Is my investment insured?

No, your investment is not insured by FDIC or by Mortgage Insurance (PMI).

Do you have a minimum loan amount?

Yes. We have a minimum loan request of $100,000.

How much can I borrow?

For residential loans, we will consider up to 70% LTV. For commercial loans, we will consider up to 65% LTV.