Recourse is a property of the capital source, not the deal
"Is this deal non-recourse?" is the wrong question. The right one is which source you're asking, because the answer is close to fixed by lender type, and it's not what most sponsors assume about their own file.
- Agency, HUD, life company and CMBS paper is non-recourse by default, standard bad-boy carve-outs aside.
- Bank paper is recourse by default, but most banks will do non-recourse at lower leverage, typically 55-65% LTV, for a strong sponsor on a stabilized asset. Ask; never assume either way.
- Debt funds vary by fund and by deal. Non-recourse tends to open up above roughly $10M for institutional sponsors, at a 50-100 bps premium.
- SBA requires a full personal guaranty. That's not a market condition, it's a program rule, and it isn't negotiable.
Where recourse comes from
Agency, HUD, life company and CMBS loans are non-recourse by design. Bank loans are recourse unless you give up leverage to change that, so a bank quote on a permanent loan usually comes with a guaranty. Recourse isn't a property of the deal type. It's a property of who's writing the check.
What's fixed by source
Agency (Fannie/Freddie), HUD, life company and CMBS paper is non-recourse as the standard, with customary bad-boy carve-outs, not because the sponsor negotiated it, because that's how those programs are built. Construction financing carries a completion guaranty, which typically burns off at certificate of occupancy or stabilization. SBA is full recourse with a personal guaranty; that's a program rule, not a credit decision, and it's never coming off the table.
The one that varies
Bank balance-sheet lending is recourse by default, and most community banks and credit unions rarely bend on that. But larger banks and portfolio lenders will underwrite non-recourse, usually at reduced leverage, typically 55-65% LTV, for a strong sponsor with a track record on a stabilized, durable-cash-flow asset. That's a real conversation to have, not an assumption to make in either direction. Debt funds sit in between: recourse posture varies by fund and by deal, and non-recourse tends to open up on institutional-quality transactions above roughly $10M, at a rate premium of 50-100 bps.
"Non-recourse through a life company at 60% LTV, or 70% with a bank on a recourse basis. That's the real choice, and it's the kind of thing that wins a mandate."
What to shop
Don't ask "is this non-recourse." Ask which sources on your file are non-recourse by structure, and what leverage a bank will give up to get there if you want one on the sheet anyway. The trade between leverage and guaranty is usually more valuable to negotiate than the rate.