Types of Collateral for Self-Directed IRA Non-Recourse Loans

We’re a bank and non-recourse lender that provides loans nationwide, but we still maintain our “small town feel.” We’re not just here to write another loan, we want to make sure it’s a good investment for you. Since 1979, we’ve been providing great customer service and honest conversations about self-directed IRAs and non-recourse loans. We’re here to help you achieve your real estate investment goals.

Acquiring a Non-Recourse Loan With Your Self-Directed IRA

When applying for a loan with your self-directed IRA, the loan needs to be structured as a non-recourse loan, and there are a few other restrictions to keep in mind (otherwise the IRS can decide that the loan doesn’t qualify for deferred tax).

Considerations For Self-Directed Non-Recourse Loans

  • You can’t borrow money from yourself: Borrowing from, selling, or lending to your IRA would be considered a conflict of interest, as well as any corporations, LLCs, or trusts that you may manage.
  • Prohibited parties: Your spouse, children, parents, or grandparents, as well as relatives of your spouse are prohibited from borrowing, selling, or lending to your IRA.
  • The loan must be in the IRA’s name: When First Western Federal Savings Bank issues you the loan, the check should be made out to your IRA, not to you personally.
  • You can’t sign a personal guarantee: A personal guarantee states that the lender is able to pursue your personal assets if the loan goes into default.
  • You can’t use personal funds to pay for the loan: Your IRA must have enough liquidity to pay for the mortgage, not your personal checking or savings accounts.
  • The loan must be structured as non-recourse debt: If the loan goes into default, the lender cannot come after your personal assets.

Contact us today and let’s discuss which types of collateral you can use with your self-directed IRA non-recourse loan.