IRA Non Recourse Loan for Self-Directed IRA Investing

The IRA non recourse loan is the loan for real estate investors who want to acquire investment property using their self-directed IRA. This highly specialized loan product is tough to find, but if you have the SDIRA, we have the IRA non recourse loan. Here's what the experts say:

“Most successful real estate investors make their money by leveraging their properties with mortgages, not by paying all cash up-front and tying up all their available money. That kind of leverage is rarely available in an IRA because of the loan restrictions under the prohibited transaction rules,” explains Ed Slott, author of The Retirement Savings Time Bomb… and how to defuse it. So why then are so many people switching their IRA funds into self-directed accounts to invest in real estate if they cannot take advantage of leverage with these retirement funds? Slott provides us with the answer. “You can… get a mortgage on property purchased with your IRA funds… without a personal guarantee by you.” This is called an IRA non-recourse loan. However, finding mortgage lenders willing to participate in this type of transaction may prove difficult."

The IRA non recourse loan is really more of a commercial product than a residential one so some of the terms may not be familiar. If you have questions about investing with your self-directed IRA just give us a call. We're happy to answer any questions you may have.

The IRA non-recourse loan is for use with a custodian or an LLC.

• Available in all 50 states
• 2 Points
• Up to 70% LTV for 1-4 Family using a fixed rate or 5/1 ARM
• Debt Service Coverage Ratio (DSCR)* of .90 for Single Family
• Purchase and refinances - even cash out - are allowed
• Minimum loan amount is $50,000
• Asset reserves within IRA are required
• Taxes and insurance escrow is required
• Interest only is not available
• Appraisal fee required at the time of loan application for 1-4 family
• Time frame from loan application submission to closing is approximately 45 days
  
  * Debt Service Coverage Ratio = Net Operating Income/Annual Debt Service
  
  Special Guidelines:
  Price appreciation: If the real estate has sold within the past 3 years and the property has appreciated more than 10% annually, the DSCR must be 1.2 times and the LTV will be 50-65%.
  
  Condominiums: Loan to Value for Condos will be between 50%-60% and the net operating income must exceed the annual debt service (annual principal and interest mortgage payment) by 20%. Condos must be warrantable.
  
  Please feel free to contact us directly with your questions and comments. We look forward to hearing from you.