The first-lien lender ran the numbers and gave you its ceiling. The loan-to-value, or the loan-to-cost on a purchase-plus-rehab or a build, is already where that lender will go. The deal still has a hole. You are not asking that lender for more. You are asking whether a second piece of capital can sit behind its lien and close the rest. This page is how that second-position or GAP piece gets read when the first lien is already maxed: what the first lender has to agree to, how the whole stack is measured, how both notes get paid off, and what cash you still need. And when the answer is a plain no.
It is not a rewrite of GAP funding and stacking capital. That page is what GAP is and what a stack looks like. This page starts after the first lender has already said its number. It will not quote a leverage figure, a combined-leverage cap, a rate, or a credit cutoff. Those numbers live on a real term sheet.
Funded Funding is a national private-money brokerage. We are not a bank. We are not an NMLS-licensed consumer mortgage lender. The loan is business-purpose, closed in an LLC or another business entity. The desk floor is $100k. No owner-occupied. This is a nationwide note, not a city page. Start on the Funded Funding homepage for the product list, or read what the desk is.
“Maxed” means the first lender already said its number
Loan-to-value is the first lender’s advance against what it says the property is worth. Loan-to-cost is the advance against what the project costs. Some lenders read value as-is, some read the after-repair value, and many read both and lend on the lower answer — see ARV vs as-is. When a file is maxed, one of those measures hit that lender’s ceiling.
A second piece does not move that ceiling. The senior advance stays the senior advance. What changes is the total debt on the property and the number of people who get paid before you do. The question is not “can someone fill the hole.” It is “does the deal still work with two lenders on it.”
Find out why the first lender stopped where it did. If the stop is a policy ceiling and the deal is sound, a second piece is a real conversation. If the stop is the value — an appraisal that came in light, thin comps, a rehab budget nobody believes — the second lender is reading the same property. See the appraisal came in and the bank still said no. A second lien does not fix a value problem. It sits on top of it.
The first lien has to know: consent and the intercreditor
Most first-lien notes and security instruments speak to other debt on the property. Many restrict or prohibit a subordinate lien without the senior lender’s written consent. Read yours before you shop a second. A second lien recorded behind the first lender’s back can be a default on the first loan. That is the fastest way to turn one note into two problems.
When a first lender allows a second, the two lenders usually paper it. An intercreditor agreement, or a subordination agreement, is the document between them. It generally sets who gets paid first, what notice each lender gets, and what each can do if the loan goes bad. Terms vary by lender. We are not lawyers, and this page is not that agreement.
Some first lenders will not allow any second at all. Some allow one only on their own paperwork. If the first lender’s answer is no, that structure is a no. Ask early, in writing, and put the answer on the file. A GAP quote that assumes consent nobody asked for is not a quote.
Combined exposure: the second reads the whole stack
The second-position lender does not underwrite its slice alone. It reads the combined debt against the same property, the same value, and the same exit. It is paid after the first lender on a sale, a refinance, or a default, so it is the first dollar at risk. What goes into that read:
- Total debt against value. The first lien, the second, and anything the first lender will still advance on draws. The cushion between what is owed and what the property is worth is what protects the second. No cushion, no second.
- The first lien’s terms. Maturity, extension terms, draw schedule, and default triggers. If the first note matures before the project can exit, the second is sitting behind a payoff problem.
- Two payments. Two notes cost money every month the project is not done.
- One story. The budget, the value, and the timeline on the first lender’s file have to be the same numbers on the second. Two spreadsheets kill the file.
The exit has to pay off both notes
On a sale, the proceeds have to clear the first-lien payoff, the second-lien payoff, and the costs of selling. On a refinance, the new loan — often a DSCR or other permanent takeout — has to retire both notes, or you bring the difference to the closing table. A refinance that only covers the first lien is not an exit for the stack. It is a new hole.
If the sale or the permanent loan is still forming when the notes come due, that wait is a separate conversation: the interest-only bridge, and the bridge product itself at bridge loans for LLC investors. A second lien does not extend the first lender’s maturity.
Liquidity: the second does not replace your cash
A second piece closes a hole in the capital stack. It does not pay your closing costs, fund your reserves, carry both payments, or float the next draw while an inspection is pending. If the plan is zero of your own money in the deal and two lenders carrying all of it, a second behind a maxed first is not the fix. Show the cash to close, the reserves, and where the carrying cost comes from.
When it works, and when it is a no
GAP behind a maxed first lien can work when:
- The first lender consents in writing and will sign an intercreditor or subordination agreement.
- The hole is a real number: project cost minus what the first lien covers.
- The deal still has a cushion between combined debt and a value both lenders will read.
- The exit pays off both notes on its own math.
- You can close and carry both payments, and the entity can take both loans.
It is a no when:
- The first lender prohibits subordinate debt and will not consent.
- The hole is the entire down payment and nothing of yours is in the deal.
- The real problem is value, and a second would sit on top of a light appraisal.
- The exit only pays off the first lien, or you cannot carry two payments.
- The property is owner-occupied, or the request is under the $100k desk floor.
What this desk is — and is not
The property can be in any state we can close. We do not publish an office address. Terms vary by lender, property, and borrower entity. Not available in every state. A blog post is not your term sheet, and it is not legal advice on your intercreditor. Business-purpose only, closed in an entity. If you will live in the property, this site is the wrong desk.
How to put the file here
- Entity ready to close. An LLC or other business entity that can take title and both loans. Why investors fund through an entity is the LLC note.
- The first lien on paper. Who the first lender is, its term sheet, its maturity, and its written answer on a second lien.
- The hole on paper. Purchase, rehab or build budget, closing costs, value, the exact number the first lien does not cover, and your cash to close.
- The exit. Sale or permanent takeout, and how it pays off both notes.
- Apply. Same intake as the rest of Funded Funding. Apply here if the first lien is maxed and the deal still needs a second piece behind it.
Frequently asked questions
Can I put a second lien behind my first lender without telling it?
No. Most first-lien notes and security instruments speak to other debt on the property, and many restrict or prohibit a subordinate lien without the senior lender’s written consent. A second filed behind the first lender’s back can be a default on the first loan. Tell both lenders about the stack on day one.
What is an intercreditor or subordination agreement?
It is the document between the first-lien lender and the second-position lender. It generally sets who gets paid first, what notice each lender gets, and what each can do if the loan goes bad. Terms vary by lender. We are not lawyers, and this page is not that agreement.
Does a second-position piece raise what the first lender will advance?
No. The first lender’s number stays its number. The second piece sits behind it and is read on the combined debt against the same property, the exit that has to pay off both notes, and your liquidity to carry both payments.
When is GAP behind a maxed first lien a no?
When the first lender will not consent, when the hole is the entire down payment and nothing of yours is in the deal, when the real problem is value, when the exit only pays off the first lien, or when you cannot carry two payments. It is also a no on owner-occupied property and on requests under the $100k desk floor.
Ready to get funded?
If you have an LLC, a first lien that is already maxed, the first lender’s answer on a second, and a hole you can size to the dollar, send the file. A second piece is read on the whole stack and the exit that pays off both notes. No fake funded counts. No stock testimonials. No owner-occupied stretch. No teaser rate that is not your file.
Ready to get funded?
Apply on the same intake we use live, or call or text (520) 552-7065.