What Is Non-Recourse Loan?
A non-recourse loan limits the lender's recovery in a default to the property itself — the borrower isn't personally liable for any remaining balance after foreclosure.
Why it matters
Most commercial and many DSCR investment loans are non-recourse (sometimes with "bad boy" carve-outs for fraud), shifting more default risk to the lender than a typical owner-occupied mortgage.
Recourse Loan vs. Non-Recourse Loan
The lender can pursue the borrower's other assets and income if foreclosure doesn't fully repay the loan — the default of most residential owner-occupied mortgages.
The lender's recovery is limited to the property itself — common in commercial and many DSCR investment loans, shifting more risk to the lender.
Most non-recourse loans still carry "bad boy" carve-outs that restore personal liability in cases of fraud, waste, or bankruptcy filed in bad faith.
Related Terms
More Financing Terms
This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
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