What is a non-recourse loan?

Non-recourse loans are the only types of loans that are permitted to be utilized within a qualified account. Traditional mortgages use personal assets and accreditation as security for the loan.  Since personal assets cannot stand as security for the loan within a qualified account, the only recourse the bank has is to go after the property itself. Therefore, they typically will require a higher percentage of the cost of the property to be used as the down payment. Please consult your tax adviser about any Unrelated Debt Financed Income Tax (UDFI) that could arise due to obtaining a non-recourse loan.