Transactional Funding in Texas: How Same-Day Double Close Funding Works
Transactional funding is a short-term loan, often repaid within hours, that pays for the A-B purchase in a double closing so a wholesaler can buy and resell a property without using their own cash. It is one of the most common ways Texas investors fund a double close. This guide explains how the money moves, what lenders charge, what can go wrong, and how to set it up with your title company.
What Is Transactional Funding?
It is a loan made only for the A-B purchase in a double close. The lender wires the purchase money to the title company, you buy the property, and the loan is repaid from the end buyer's funds when the B-C side closes, typically the same day. Because the end buyer's money is already committed, the lender relies mainly on the B-C contract rather than your credit.
How the Money Moves on Closing Day
- The end buyer's funds, cash or loan proceeds, arrive at the title company for the B-C closing.
- The transactional lender wires the A-B purchase money to the title company.
- The A-B side closes: the seller is paid and the deed to you is recorded.
- The B-C side closes: the transactional lender is repaid its principal and fee, and your profit is wired to you.
What Transactional Funding Costs
Lenders commonly charge around 1 to 2 percent of the amount funded, often with a minimum fee and sometimes a processing or document fee. The fee is paid at closing from your proceeds. Add it to the second set of closing costs to see whether a double close beats an assignment on your deal; our assignment vs. double closing comparison shows how to weigh them.
What Transactional Lenders Usually Ask For
- Both executed contracts, A-B and B-C
- Proof the end buyer's funds are ready: proof of funds or a lender approval
- The title company's contact details and its willingness to close both sides
- The title commitment, and your entity documents if an LLC is buying
What Can Go Wrong
- The end buyer's lender delays funding, so the B-C side cannot close the same day. Ask your transactional lender in advance what happens if repayment slips a day.
- An FHA end buyer. FHA rules generally do not allow insuring a purchase of a home resold within 90 days of the seller's acquisition, so plan for a cash or conventional buyer.
- Wires sent late in the day. Federal wire cutoffs and recording office hours both matter, so schedule the closings early.
- Wire fraud. Every party should confirm wiring instructions by phone with a known number; see how to protect your closing funds.
Frequently Asked Questions
Do I need good credit for transactional funding?
Usually not. Most transactional lenders focus on the strength of the B-C contract and the end buyer's funds rather than your personal credit.
Can I use transactional funding with an assignment?
No. An assignment has only one closing and you never buy the property, so there is nothing to fund. Transactional funding exists only for double closings.
Will any title company accept transactional funding?
No. Some title companies do not close double closings at all, and others restrict how they are funded. Confirm before you sign the A-B contract.
Fund and Close Your Double Close With Cottonwood
We work with transactional lenders on double closings from our Sugar Land and Allen offices. Read the full double closing guide or see our double closing title services to open a file.