Non-Recourse Loan

What is a Non-Recourse Loan?





A non-recourse loan is a type of loan where the IRA account holder is not personally liable for repaying any outstanding balance on the loan. Instead, the loan is in the name of the Self-Directed IRA, not the account holder, and it is secured only by collateral, typically the property being purchased. A non-recourse loan provides many Self-Directed IRA account holders a way to further diversify their portfolio with real estate.

Paper houses in front of laptop that states “property investment” indicating the investor is investing in real estate with his Self-Directed IRA.

Benefits of a Non-Recourse Loan

Benefits of a Non-Recourse Loan: (1) A Means of Diversifying Your Portfolio (2) The Self-Directed IRA is Liable for Your Loan, Not You Personally (3) IRA-Compliant and Tax-Advantaged Account

Madison Trust's Lending Program

Our lending program gives you the opportunity to invest in a variety of property types including residential, commercial, industrial, and multi-family homes. Visit How To Invest in Real Estate with a Self-Directed IRA Non-Recourse Loan for further information regarding our lending program and non-recourse loan options.

Investors shaking hands with a a non-recourse loan lender to confirm their real estate investment..

How To Start Investing with a Non-Recourse Loan

1

Open and Fund a Self-Directed IRA at Madison Trust 

Open a Self-Directed IRA with Madison Trust by completing our simple online application. Fund your Self-Directed IRA by transferring or rolling over funds from an existing retirement account, such as an IRA or 401(k), or by making an initial contribution.
2

Identify an Income Producing Property

Think about what type of property you are looking to invest in with your Self-Directed IRA. Our lending program gives you the opportunity to invest in residential, commercial, industrial, or multi-family properties.
Icon of a tall building to signify identifying an income producing property to invest in with a Self-Directed IRA non-recourse loan
3

Execute a Purchase Agreement in the 
Name of your Self-Directed IRA

Madison Trust will sign all necessary paperwork involved in executing a Purchase Agreement. Simultaneously, you will complete an Investment Authorization Form and Madison Trust will place the deposit on the property.

The buyer of the property is your Self-Directed IRA and should be listed as follows, “Madison Trust Company Custodian FBO [your name] [your Madison Trust account number]”.
4

Apply for a Non-Recourse Loan with 
Our Preferred Lending Partner

Schedule a call with a Madison Trust Self-Directed IRA Specialist and we will put you in touch with our preferred lending partner.
5

Close on the Property and Loan

Madison Trust Company will review and sign all closing documents. Simultaneously, you will complete an Investment Authorization Form for Madison Trust to fund your percentage of the investment. (Payments are made from your Self-Directed IRA, not your personal bank account). Then, the lender will provide the remaining amount needed to close on your real estate investment.
Icon of a house to signify a real estate investment.

Learn more about leveraging your real estate investment with a Self-Directed IRA

Download a Free PDF
Are you interested in investing in real estate through a non-recourse loan? Call one of Madison Trust's Self-Directed IRA Specialists today to get started! 
Schedule A Call
Non-recourse loan lender handing real estate investor the keys to their investment property.

Non-Recourse Loans - FAQs

What is the processing time for a non-recourse loan?

The processing time is typically 3 - 6 weeks from application to closing, depending on the title work. The approval for the loan takes place within 7 days. 

How does Madison Trust's Lending Program work?

Madison Trust’s lending program combines our expertise with Self-Directed IRAs, unmatched client support, and fixed rates so you can seamlessly invest in the property of your choice.

The details of our lending program are as follows:
    • Loan Amounts: $100,000 - $499,999 (will consider larger requests)
    • Term: 
          • Loan Term: 3 - 5 years
          • Amortization: Up to 25 years 
    • Loan Rate: 7.50% ±
    • Loan-to-Value: 50% - 70% 
    • Debt Service Coverage Ratio: 1.25% + 

What are fees for a non-recourse loan?

Below is an approximation of the fees for a non-recourse loan.
    • Origination Fee: 2%
    • Closing Costs (title, filings, etc.): Typically between $2,500 - $5,000

Are there any additional rules to keep in mind for a non-recourse loan? 

When an IRA uses leverage to purchase an investment, then the earnings attributable to the leveraged portion are subject to UDFI (Unrelated Debt Financed Income). The filing of Form 990-T is required.

Ready to Get Started? We're Here for You! 

Schedule a complimentary discovery call with a dedicated Self-Directed IRA Specialist who will answer all your questions and provide you with step-by-step guidance. Start investing in what you believe in today with a Madison Trust Self-Directed IRA!
Schedule A Call

Ready to invest in your Future?

Reach out to our team, and we’ll answer any questions you may have.
Corporate Headquarters:
Madison Trust Company
401 East 8th Street • Suite 200
Sioux Falls, SD 57103
Mailing Address:
Madison Administration Company
One Paragon Drive • Suite 275
Montvale, NJ 07645
Hours:
Monday - Thursday: 9:30AM - 5:30PM EST
Friday: 10:00AM - 4:00PM EST
Saturday/Sunday: Closed
Contact:
(800) 721-4900
[email protected]
F: 845-947-1212
magnifiermenuchevron-down