FAQs for IRA Non-Recourse Loans
What is a Non-Recourse Loan?
A Non-Recourse loan is one in which the IRA/SEP account holder is not personally liable for repayment of the loan. The security instruments allow no recourse against the individual account holders or the balances of your IRA funds. In the event of default/foreclosure the lender can only look to the property as the sole source of repayment. The non-recourse lender cannot pursue other assets owned by the account holder or the IRA
Who is eligible for a Non-Recourse Loan using their IRA to purchase rental/investment properties?
Anyone who has at least 30%-35% of the purchase price vested in a self-directed IRA/SEP has the opportunity to buy rental properties using a non-recourse loan. This is subject to loan approval, including an acceptable real estate appraisal, as determined by North American Savings Bank.
In which states can I purchase rental property using my IRA?
NASB is a national IRA lender financing eligible property with non-recourse loans in eligible.
What types of rental property are eligible for NASB’s non-recourse financing?
Single family detached residential, warrantable Condo’s, PUD’s, duplexes, 4-plexes, and multifamily (5 or more units).
Can properties be held in a LLC?
Yes. Discuss the LLC structure with your legal/tax advisor or an IRA/SEP administrator.
What types of loan programs are available?
NASB offers a variety of adjustable rate and fixed rate non-recourse loans for you to choose from. NASB does not offer an interest only loan for the non-recourse financing.
What documentations are required for loan approval?
- Completed loan application.
- Current detailed Rent Roll or copies of signed leases (leases or rent roll for currently unoccupied properties are not required).
- Most recent asset statement verifying IRA assets for purchase and reserves.
- Purchase/Sales contract, signed by the IRA account holder and the administrator. The contract must show the buyer to be in the name of the IRA or LLC.
- Acceptable real estate appraisal for the property to be financed. Appraisal fee required at the time of loan application before NASB will order the real estate appraisal.
What are the income requirements for rental property?
Typically, the financed property must generate sufficient Net Operating Income (rents minus operating expenses) to exceed the debt payments by 20–25%.