Stack Method Funding: DSCR Loan + Seller Financing

Buy rental property with less cash by stacking a DSCR loan with seller financing.

FundMyEstate Stack Method Funding combines a DSCR (Debt Service Coverage Ratio) loan with seller financing. The seller carries back part of the purchase price, the DSCR loan covers most of the rest, and you bring a smaller down payment. The deal works when the seller financing structure is clear, the seller agrees to clearly documented terms, and the DSCR lender is comfortable with the structure.

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What Is Stack Method Funding?

Stack Method Funding is a creative financing strategy that stacks two sources of financing on one purchase:

DSCR loan: A rental-property loan qualified mainly on the rental income of the property compared to its debt payments, rather than on your personal income.
Seller financing (seller carry-back): The seller agrees to finance part of the purchase price. You repay the seller over time under the agreed terms instead of paying that amount in cash at closing.
Your down payment: The cash you bring to closing, reduced because the seller is carrying back part of the price.

The result is one purchase funded by the DSCR lender, the seller, and you, with each piece clearly defined and documented.

How the Stack Works

Each layer of the stack covers a defined part of the purchase price.

Layer	Who provides it	What it covers
DSCR loan	DSCR lender	The largest share of the purchase price
Seller carry-back	Property seller	An agreed amount of the price, repaid to the seller over time
Down payment	You, the investor	The remaining cash due at closing

How the layers fit together: The purchase price is split between the DSCR loan, the amount the seller carries back, and your down payment. The rental income of the property has to support the DSCR loan payment and the seller financing payments together, which is why the lender reviews the full structure before approval. Actual loan amounts, carry-back amounts, down payments, and terms depend on the property, the rents, and DSCR lender approval.

Why Investors Use Stack Method Funding

Less cash to close: The seller carry-back lowers the down payment you need to bring.
Keep capital for the next deal: Hold on to cash for repairs, vacancies, or your next acquisition.
Qualify on the property: DSCR loans focus on rental income, which suits self-employed investors and growing portfolios.
Flexible seller negotiations: Sellers who do not need all of their cash at once can receive payments over time, which can help you win the deal.
Scale a rental portfolio: Repeat the stack on additional buy-and-hold properties.

Requirements for Stack Method Funding

Every Stack Method deal must meet these three requirements.

1. The Lender Must Understand How the Seller Financing Is Structured

The lender needs to understand how the seller financing is being structured, including:

The amount being carried back by the seller
The down payment
The repayment terms of the seller financing

2. The Seller Must Be Agreeable to the Financing Arrangement

The seller must be agreeable to the financing arrangement, with the terms clearly documented. The purchase agreement and seller financing documents should spell out the carry-back amount, the down payment, and the repayment terms.

3. The DSCR Lender Must Be Comfortable With the Structure

The DSCR lender must be comfortable with the structure. The lender reviews the full stack, including the seller financing terms and the down payment, before approving the loan.

Check If Your Stack Method Deal Qualifies

Stack Method Funding Checklist

Documents to prepare

Executed purchase agreement for the property
Seller financing terms in writing (amount carried back and repayment terms)
Documentation showing the seller agrees to the financing arrangement
Down payment amount
Rent roll, current leases, or market rent estimate for the property
Property address and basic property details

Deal structure to confirm

Purchase price clearly split between the DSCR loan, seller carry-back, and down payment
Seller carry-back amount clearly defined
Seller financing repayment terms clearly defined
Seller agreement clearly documented
Structure reviewed and accepted by the DSCR lender

How the Stack Method Process Works

Step 1: Find a Rental Property and a Flexible Seller

Identify a buy-and-hold property where the seller is open to carrying back part of the price.

Step 2: Negotiate the Seller Financing Terms

Agree on the purchase price, the amount the seller will carry back, your down payment, and the repayment terms.

Step 3: Document the Agreement

Put the seller financing terms in writing and make sure the seller agreement to the arrangement is clearly documented.

Step 4: Submit Your Deal to FundMyEstate

Send the purchase agreement, the seller financing terms, your down payment details, and the rental information for the property.

Step 5: The DSCR Lender Reviews the Structure

The DSCR lender reviews how the seller financing is structured and confirms it is comfortable with the full stack.

Step 6: Approval and Closing

Once the structure is approved, the DSCR loan closes together with the documented seller financing and your down payment.

Step 7: Repay Both Layers Over Time

You make payments on the DSCR loan and repay the seller under the agreed terms while the property produces rental income.

Stack Method vs. Traditional DSCR Purchase

Factor	Stack Method Funding	Traditional DSCR Purchase
Financing sources	DSCR loan + seller carry-back	DSCR loan only
Cash to close	Reduced by the seller carry-back	Full down payment from the investor
Seller involvement	Seller finances part of the price	Seller is paid in full at closing
Documentation	Purchase agreement + documented seller financing terms	Purchase agreement
Lender review	Full stack structure reviewed	Standard DSCR review
Typical fit	Flexible sellers, investors keeping cash on hand	Investors with the full down payment available

Common Mistakes That Delay a Stack Method Deal

Vague seller terms. If the carry-back amount, down payment, or repayment terms are unclear, the lender cannot review the structure.
Undocumented agreements. A verbal yes from the seller is not enough. The terms must be clearly documented.
Skipping lender review. Negotiating a structure the DSCR lender will not accept wastes time. Submit early so the lender can review it.
Rent that does not support the debt. The property income should support the combined payments.
Last-minute changes. Changing the seller terms late in the process can restart the lender review.

Rental Loans: long-term financing for buy-and-hold investors
Bridge Loans: short-term capital between deals
Double-Close Transactional Funding: funding for A-to-B and B-to-C wholesale closings
EMD Funding: earnest money deposit capital to lock up contracts
Mortgage Calculator: estimate loan payments

Frequently Asked Questions

What is Stack Method Funding?

Stack Method Funding combines a DSCR loan with seller financing. The seller carries back part of the purchase price, the DSCR loan covers most of the rest, and the investor brings a smaller down payment.

Who is Stack Method Funding for?

It is designed for real estate investors buying rental properties who want to reduce their cash to close and have a seller willing to finance part of the purchase price.

What are the requirements for Stack Method Funding?

The lender needs to understand how the seller financing is being structured, including the amount being carried back, the down payment, and the repayment terms. The seller must be agreeable to the financing arrangement, with the terms clearly documented, and the DSCR lender must be comfortable with the structure.

What does seller carry-back mean?

A seller carry-back means the seller finances part of the purchase price. Instead of receiving that amount in cash at closing, the seller is repaid over time under the agreed terms.

Do the seller financing terms have to be documented?

Yes. The seller must be agreeable to the financing arrangement, and the terms must be clearly documented so the lender can review them.

What does the DSCR lender review?

The DSCR lender reviews the full structure, including the amount carried back, the down payment, the repayment terms, and the rental income of the property, to confirm it is comfortable with the deal.

Do I still need a down payment?

Yes. The seller carry-back reduces the cash you need, but a down payment is still part of the agreed structure.

Can I use Stack Method Funding on multiple properties?

Yes. Investors can repeat the stack on additional rental properties when each deal meets the requirements and the DSCR lender is comfortable with the structure.

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Ready to Stack Your Next Rental Deal?

Have a seller willing to carry back part of the price, clearly documented terms, and a rental property that works? FundMyEstate can review your Stack Method deal today.