Use your self-directed IRA to purchase real estate with a non-recourse loan.
We offer a unique financing program for the purchase of property with a real estate IRA. Borrowers can choose from a variety of adjustable and fixed-rate non-recourse loans. We can usually provide approvals within 48 hours of receiving a complete application. With decades of servicing IRA non-recourse loans, we're ready to answer all your questions including:
- How self-directed IRAs function
- What a non-recourse loan is and how it works
- What the IRS has to say about real estate in an IRA
- The step-by-step actions on how to get started using real estate investments within your IRA to earn returns
Reach out to us.
IRA Non-Recourse Loan FAQs
North American Savings Bank, F.S.B. has been providing loans to individuals since 1927. As a leader in the mortgage industry, NASB offers a variety of mortgage loans and is the only nationwide nonrecourse lender for IRA real estate investments. We have retail lending branches in Missouri and offer nationwide lending via the internet.
A non-recourse loan is one in which the IRA 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.
Anyone who has at least 30-40% of the purchase price vested in a self-directed IRA 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 NASB.
Our website offers a list of Self-Directed IRA Administrators who allow non-recourse loans. Please contact one of the administrators for more details. NASB does not represent or endorse any of these companies nor do they represent NASB. Please perform all prudent due diligence before setting up an account.
The minimum required for a single family home is 30%-40% of the purchase price and 40% of the purchase price for condos or 2-4 units. Insufficient cash flow or the condition of the property may require a larger down payment.
NASB can finance eligible property with non-recourse loans in all 50 states.
Allow 30-45 days from the date we receive your loan application and your purchase contract.
NASB offers a 7/1 and 10-year ARM, and 10, 15, 20 or 25-year fixed. All loan programs are principal and interest payments.
Single family detached residential, warrantable condos, PUDs, duplexes, 4-plexes, and multi-family (5 or more units).
Ineligible properties include: Residential with large acreage, raw land, farms, manufactured or log homes, *non-warrantable condos, condo-hotels, co-ops, time shares, hotels, senior or assisted living facilities, non-franchise restaurants, entertainment properties, mini-storage. Square footage must be 750+ (per unit) for condos and 900+ (per unit) for all other properties.
*Condominiums: Condos must meet the following minimum criteria to be considered warrantable. The project building must be 100% complete, including common areas. The units within the building must be 60% sold and 33% of all building units must be owner occupied or second homes (versus tenant occupied). Condos not meeting these criteria are not eligible under our non-recourse program.
Yes. Discuss the LLC structure with your legal/tax advisor or an IRA administrator.
Yes, the funds would be distributed back into the IRA. This allows you the option of purchasing more assets within your IRA.
- Purchase transactions for investment property only.*
- IRA assets to be managed by a custodian in a self-directed IRA.
- IRA assets must be verified for purchase and reserves. IRA reserve requirement may be up to 20% of the loan amount, to be available in the event of insufficient cash flow to pay operating expenses and mortgage payments.
- No employment or income verification required.
- Properties must meet the debt service coverage ratio** guidelines.
*Must be income producing investment property (rental)
**DSCR: Debt service coverage ratio = net operating income/annual debt service
Typically, the financed property must generate sufficient net operating Income (rents minus operating expenses) to exceed the debt payments by 20%-25%.
NASB offers an unique financing program designed for the non-recourse financing requirements for IRA investments, and the application process is easy. Loan approval is generally within 48 hours of receipt of a complete application, and is subject to appraisal and verification of IRA funds for closing.
NASB will quote interest rates on a case by case basis of the collateral type and down payment. The following fees (subject to change without notice) and costs apply:
- 1% origination fee to NASB
- $485 underwriting fee to NASB
- $410 processing fee to NASB
- $16 Flood Certification fee
- $500-$600 appraisal fee (including rent comps), due at time of application
- $_____Settlement/escrow fee
- $_____Title Insurance
- $_____Recording fees
- $_____Mortgage registration or other state fees (if applicable)
- $_____Prepaid Interest and taxes*
- $_____Initial Hazard Insurance Premium*
- $200 Attorney Review Fee
*Escrows for taxes and hazard insurance are required. Additional costs may be incurred for commercial and multi-family properties.
- Completed Property Eligibility Quote Form
- 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
A minimum loan amount of $175,000 is required to apply. Exceptions include mortgage products for properties located within the Greater Kansas City metro and surrounding areas. Contact a NASB Loan Officer for details on the excluded areas and/or zip codes.
IRA Loan process and documents needed
The IRA Non-Recourse loan process will take roughly 30-35 days from the date we receive the loan application and appraisal fee.
First 10 days
- Driver’s license
- IRA statements
- Appraisal fee
- Instruction letter to purchase real estate
- Order property insurance
- Disclosures mailed out
- Contract titled correctly
- Contract executed by the custodian
- Satisfactory appraisal
- Title commitment from title company/attorney
- Loan docs sent to title company/attorney
- A title company/attorney mail docs to IRA account holder to approve
- Borrower mails docs to custodian/administrator to execute
- Docs mailed back to title company/attorney; the loan is funded
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1This is not intended to and does not constitute legal advice or financial / investment / tax advice. North American Savings Bank does not make any guarantee or other promise as to the results obtained. You should consult with an attorney or other professional to determine what may be best for your individual needs.