Broker vs. Correspondent vs. Table Funding: Which One You Are and How You Get Paid

Every loan has three questions under it. Whose name is on the note? Whose money funds it at closing? Who holds the risk the day after?

Answer those three and you know which model you are working in: broker, table funder, or correspondent. Each one pays differently. Each one exposes you to different risk. Most originators we talk to have never written the answer down.

This post covers business-purpose loans only: fix and flip, ground-up construction, DSCR rental and bridge loans to investors and their entities. Nothing here is about consumer mortgages or owner-occupied homes.

Where the vocabulary comes from

The words come from federal mortgage rules, even though business-purpose loans sit outside most of them.

The CFPB's Regulation X defines table funding 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, eCFR current as of 23 Sep 2026). The same section describes a mortgage broker as an intermediary between a borrower and a lender, "including such a person that closes the loan in its own name in a table-funded transaction."

Regulation Z, meanwhile, exempts "an extension of credit primarily for a business, commercial or agricultural purpose" and "an extension of credit to other than a natural person" (12 CFR 1026.3(a), eCFR current as of 23 Sep 2026). A loan to an LLC to flip a house is the textbook case.

So borrow the definitions. Do not assume the consumer rulebook applies. What does apply is state law, and that varies a lot.

Licensing varies by state, and this post is not legal advice. Confirm your own licensing position with counsel before you choose a model.

Model 1: Broker

You find the borrower, package the file, and place it with a lender. The lender underwrites, the lender's name is on the note, and the lender's money funds the loan.

Fortra Law's 26 Sep 2024 overview of private lending models puts it plainly: in wholesale lending "the wholesale lender is the named lender in the loan documents," and the originator is paid broker fees shown on the settlement statement.

How you get paid. Your fee is disclosed on the closing statement and paid out of closing. No capital at risk, no loan to sell, no warehouse line. If the deal does not close, you are not paid, so your real job is getting a file to the finish line.

What you carry. Your reputation with the borrower and the lender. You do not own the loan after closing. If it defaults, that is the lender's problem, not your balance sheet's.

Who it fits. Most originators placing investor loans, and every new one. It scales on relationships, not capital. We cover fee structures in more depth in how hard money broker commissions work, and the first steps in how to become a hard money broker.

Model 2: Table funding

You close the loan in your own name. A funding partner wires the money to settlement at closing. The loan is assigned to that partner immediately.

Fortra Law's 3 Nov 2021 explainer: "The originator is on the loan documents as the lender. At closing, funds are delivered by the true funder, and an assignment of the mortgage [and] Note is filed immediately."

Why originators want it. The borrower sees your name on the documents. You present as a lender, and the relationship stays with you. Fortra Law's 2024 overview notes the model lets originators market themselves as the lender without misrepresenting who they are, because they genuinely are the named lender.

How you get paid. You keep origination fees, subject to whatever split your funding partner requires. Some partners also share the rate. Private Lender Link's table funding explainer (17 Aug 2021, updated 23 May 2024) reports that some capital providers take 1 to 1.5 points or split fees 50/50, and that originators may receive 50 to 200 basis points of yield spread. Those are one publication's reported market figures, not a standard and not our policy. Every partner sets its own terms.

What you carry. More than a broker. Your name is on the note, so you answer to the borrower at closing. You underwrite to the funder's guidelines, and a loan that does not meet them does not fund. Fortra Law's 2024 overview says a table funder "likely needs mortgage lender licensing" rather than a broker license.

The California example. Both Fortra Law (2021) and Private Lender Link (2024) flag California as restrictive here. Private Lender Link reports that lenders holding only a California Finance Lenders license must fund from their own balance sheet and cannot use table funders. One state, one rule. Your state may differ, which is the point of checking with counsel.

Model 3: Correspondent

You close the loan in your name with your own money or a credit line, hold it briefly, then sell it to a loan buyer.

Fortra Law's correspondent explainer (27 May 2026, updated 9 Jun 2026) describes originators funding "using their own capital, warehouse lines, or institutional credit facilities," then selling quickly "to recycle capital and maintain liquidity." Fortra's 2024 overview adds that correspondents are compensated through gain-on-sale premiums, and its 2021 piece notes they "retain all origination related fee income rather than splitting this income."

How you get paid. Two streams. Your origination fees at closing, kept in full. Then a premium, or a discount, when you sell the loan. That second number depends on the buyer, the loan and the market on the day you sell.

What you carry. The most of any model. Fortra Law (2026) says correspondent agreements spell out repurchase obligations when "loans default or are misrepresented." Buyers work two ways. Non-delegated: the buyer reviews the file before you close. Delegated: you underwrite to their guidelines and carry the risk if they reject the loan afterwards. A rejected loan is one you now own, funded with your capital or your credit line.

Who it fits. Originators with capital, a credit facility, an underwriting team and the stomach to hold a loan nobody wants to buy.

Side by side

Sources: Fortra Law (3 Nov 2021, 26 Sep 2024, 27 May 2026); Private Lender Link (updated 23 May 2024). The license row is general. Your state sets the actual rule.

Three questions to answer before you pick

1. Where does the borrower relationship need to live? If your investors come back for their fifth and sixth flip, having your name on the documents has real value. If they come to you for access to lenders, it has less.

2. What happens to you on a bad loan? A broker loses a fee. A table funder loses a closing and maybe a funding partner. A correspondent can end up owning a loan with its own money. Price that risk honestly before you look at the extra income.

3. What will your state license actually let you do? Some states license commercial loan brokers, some do not, and the lender-versus-broker line lands in different places. Settle this first. Everything else follows from it.

What any lender needs from you, whichever model you use

Whatever your model, the file is the product. A lender underwrites what you send, and the clock starts when the file is complete, not when the email lands.

• Entity documents: articles, operating agreement, EIN letter and good standing for the borrowing LLC. See getting a real estate loan in an LLC.
• The deal: purchase contract, and for a rehab or build, a scope of work and budget.
• The borrower: track record of completed projects, credit authorization and proof of liquidity.
• The property: address, current condition and insurance contact.

Our document checklist has the full list, and what lenders check before issuing a term sheet shows what an underwriter reads first. Once terms come back, how to read a hard money term sheet walks through every line.

Where Funded Capital fits

We lend to real estate investors in 45 states, with Fix & Flip from 8.75% and DSCR from 6.75%, and we typically close in 5 to 10 business days, depending on the deal. Terms are subject to underwriting, appraisal, title, and insurance.

Brokers place fix and flip, DSCR rental and new construction loans with us every week. Run the numbers first with our loan calculator. Ask us which structures we support on a given deal before you promise a borrower anything. We will tell you plainly.

Ready to place a deal? Apply Now or call (305) 857-5620.