Empowering Borrowers: How Non-Recourse Loans Redefine Investing in Real Estate

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.

Benefits of a Non-Recourse Loan

Non-Recourse Lending Program

The non-recourse 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 the non-recourse lending program and non-recourse loan options.

A couple meeting with a Self-Directed IRA Specialist and shaking hands to show the working relationship between SDIRA account holders and a SDIRA custodian.

How To Start Investing with a Non-Recourse Loan

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.

Identify an Income Producing Property

Think about what type of property you are looking to invest in with your Self-Directed IRA. The non-recourse lending program gives you the opportunity to invest in residential, commercial, industrial, or multi-family properties.

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]”.

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.

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.

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 the Non-Recourse Lending Program work?

The non-recourse 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 the non-recourse 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: Prime +
• Loan-to-Value: 65% ±
• 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!