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Non-Recourse Lenders

Non-Recourse Lenders: Debt Financing Overview

If you’re looking for non-recourse lenders to provide a loan for a self-directed IRA real estate investment – also known as debt financing – there are several financial institutions that provide this type of loan. But you must ensure the lender is a “non-recourse loan” lender.

To find an appropriate non-recourse lender, try searching “self-directed IRA non-recourse lenders” or “self-directed IRA (or 401(k)) non-recourse loan,” and you’ll likely find a list of individuals or entities that will lend money to self-directed IRAs and 401(k)s.

As you consider this type of financing, thee are a couple of things you should keep in mind:

  1. An account can take on a loan to purchase property. The loan must be non-recourse, meaning the only collateral securing the loan is the property being purchased with the loan.
  2. Other assets held within the account or the account holder personally cannot be held liable in the event of a default on the repayment of the non-recourse loan.

How to make an investment with a non-recourse lending

For Equity Trust clients looking to use non-recourse lending, note that the following must be submitted with your debt-financed real estate purchase request:

  • Real Estate Direction of Investment
  • Non-Recourse Loan Documentation
    • Promissory Note (including verbiage that loan is non-recourse)
    • Deed of Trust/Mortgage
    • All loan paperwork should be signed by the account holder, including Settlement Statement or HUD showing the correct titling and funding amount along with any documents that will require Equity Trust Company’s signature

Mortgage payments of the non-recourse loan held within the account must be paid to the lender from the account.

Bill payments must be submitted to send payment for the mortgage. A recurring bill payment can be set up to automatically send payments for the mortgage on a scheduled basis: Log into your myEQUITY account and navigate to Money Movement > Bill Pay to set this up.

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