The quick read: Non-recourse is written into the Freddie Mac, Fannie Mae and HUD multifamily programs and is the documented design of CMBS loans. Personal recourse lives at banks and SBA lenders: in Federal Reserve data, roughly three-fourths of the largest U.S. banks' commercial real estate loans carried full or partial recourse, and SBA's rule says 20 percent owners generally must guarantee the loan. The cost of going without: at those banks, recourse loans carried rate spreads at least 20 basis points lower and loan-to-value ratios about 3 percentage points higher than non-recourse loans.
A non-recourse loan limits the lender to the property and its income if the loan fails, subject to carve-outs: named "bad acts," which Fannie Mae's DUS term sheet illustrates with "fraud and bankruptcy," that bring personal liability back. This guide sorts lenders by type on that single term, using their own published documents and Federal Reserve loan-level research. For how the same lender types compare on rate, leverage and term overall, see which lender type offers the best commercial real estate loan terms.
Which lenders put non-recourse terms in writing?
The lenders that put non-recourse in writing are the agency and government-insured multifamily programs: Freddie Mac's Optigo term sheets, Fannie Mae's DUS term sheet and HUD's insured-loan guidance each provide for loans that limit the borrower's liability to the property, subject to carve-outs for specified bad acts. Their exact wording differs, and the differences matter when you compare quotes.
Freddie Mac Optigo Fixed-Rate (term sheet dated April 2026): "Non-recourse except for standard carve-out provisions," with a borrower that "must typically be a Single Purpose Entity" and a $10 million minimum loan.
Freddie Mac Optigo Conventional Small (term sheet dated April 2026): the same recourse line, for loans of "generally, $2 million to $10 million," with "Standard loan documents required, without modifications."
Fannie Mae DUS (term sheet read September 2026): "Non-recourse execution is available with standard carve-outs for 'bad acts' such as fraud and bankruptcy."
HUD-insured multifamily (MAP Guide, revision of March 19, 2021): "The HUD mortgage note will contain a non-recourse provision as to the mortgagor entity."
Read the verbs. Freddie Mac lists non-recourse as the loan's recourse requirement; Fannie Mae says non-recourse execution "is available," so confirm it in writing on your quote rather than assume it. HUD's guide adds that "certain parties may be held personally liable to the extent of losses arising from certain 'bad acts' and malfeasance," with those parties identified in the Firm Commitment.
All of these are multifamily executions; Fannie Mae's DUS eligibility requires "a minimum of five units (50 pad sites for Manufactured Housing Communities)." An owner of office, retail, industrial or hotel property who wants non-recourse debt is choosing among CMBS, life companies, debt funds and banks instead.
Are CMBS, life company and debt fund loans non-recourse?
CMBS loans are bankruptcy remote by design and non-recourse outside their bad-boy clauses, and Federal Reserve researchers describe CRE lenders other than banks as overwhelmingly non-recourse, but this guide found no public term sheet stating a recourse position for life companies or debt funds, so for those two lender types recourse is a term to confirm in the quote.
CMBS. A Federal Reserve Board working paper (FEDS 2019-079), using loan-level data on loans originated from 2012 to 2017, described "the typical CMBS loan" as "a 10-year, non-recourse, fixed-rate loan on an income-producing property with prohibitive protections against prepayment." A later Fed paper (FEDS 2021-079, December 2021) gives the reason: CMBS loans "are bankruptcy remote by design and therefore non-recourse outside of 'bad boy' clauses, which trigger recourse in the event of a particular bad act (such as fraud) on the part of the borrower." The trade is flexibility: the 2019 paper notes that the special servicer who handles a distressed loan "does not have all of the options for workouts that a balance sheet lender would have."
Life companies. The 2021 paper's authors wrote that, "Unlike other CRE lenders, who overwhelmingly provide non-recourse loans, banks offer both recourse and non-recourse financing." That paper studied banks, not life insurers, and this guide found no life-company term sheet stating a recourse position. The 2019 data show how life insurers lend: "life insurers generally requiring lower LTVs," with "the majority of life insurer CRE loans" between 0.50 and 0.67 loan-to-value, against 0.60 to 0.71 for the majority of CMBS loans, and, measured as spreads, "life insurers have the lowest rates." Ask a life company to state its recourse position and carve-outs in the application.
Debt funds and bridge lenders. This guide found no public term sheet or regulator data stating a standard recourse position for debt funds, so ask each one: Is the loan non-recourse, and is a completion, interest-carry or other guaranty still required while the business plan is under way? The nearest data point comes from banks, not debt funds: in the 2021 Fed paper's bank data, "just under 70 percent of loans secured by transitional properties have recourse."
Do banks, credit unions and SBA lenders require personal recourse?
Personal recourse is the norm in the bank data and a rule at SBA: roughly three-fourths of the largest U.S. banks' CRE loans carried full or partial recourse, SBA's regulation says 20 percent owners generally must guarantee the loan, and a credit union that skips a personal guarantee must document what offsets the added risk.
Banks. The December 2021 Fed paper used regulatory loan-level data (the FR Y-14Q) on the commercial real estate portfolios of the largest U.S. banks, covering 2012 to 2020. "Roughly three-fourths of bank CRE loans have full or partial recourse," it found, but dollars tell a different story: "the average origination amount of a recourse loan is $9 million, compared to $43 million for a non-recourse loan," so "only 45 percent of bank CRE loans by value have recourse." Which bank you ask matters as much as whether you ask: "The top quintile of lenders have recourse on over 90 percent of their CRE loans, while the lowest quintile of lenders have recourse on 14 percent of such loans." The data point to where non-recourse bank loans sit: the larger loans, at the banks that use recourse least.
Credit unions. NCUA's modernized member business lending rule, approved February 18, 2016, with most provisions effective January 1, 2017, gave "credit union loan officers the ability, under certain circumstances, to not require a personal guarantee." Per NCUA's summary of the final rule, the credit union must "document for commercial loans without a personal guarantee that mitigating factors offset the additional risk." Ask early what it would need to document.
SBA. The regulation at 13 CFR 120.160(a) says "Holders of at least a 20 percent ownership interest generally must guarantee the loan," and lets SBA or a delegated lender "require other appropriate individuals or entities to provide full or limited guarantees of the loan without regard to the percentage of their ownership interests." If capping personal liability is the priority, the SBA route works against it.
What does a non-recourse loan cost you?
A non-recourse loan costs you in rate, leverage and flexibility: in Federal Reserve data from the largest U.S. banks, recourse loans carried rate spreads at least 20 basis points lower and loan-to-value ratios about 3 percentage points higher, and agency non-recourse loans come with single-asset or single-purpose borrowers, reserve escrows and yield maintenance or defeasance prepayment terms.
The Fed researchers found that "recourse is valued by lenders and is treated as a substitute for conventional equity," so without recourse the lender looks for that cushion in your equity or its spread. Their estimates: recourse loans command spreads 20 basis points lower than otherwise similar loans (52 basis points in their instrumental-variable estimate) and loan-to-value ratios 2.8 percentage points higher (3.4 points in that estimate). For multifamily, recourse loans carried spreads 31 basis points lower on average; for retail, industrial and office loans, average spreads for the two were within 7 basis points of one another.
10-year Treasury yield (FRED series DGS10): 4.96 percent as of September 22, 2026
Illustrative arithmetic, not a quote: on a $10,000,000 loan, 20 basis points is $20,000 of interest a year, and 3 percentage points of loan-to-value on a $10,000,000 purchase is $300,000 more equity at closing. On Freddie Mac's fixed-rate loans, the Treasury index is, in the term sheet's words, "the most volatile part of the coupon"; the 10-year yield above shows where one such index stood.
What the spread buys: the same study found recourse gives the lender "additional bargaining power" in modification talks, and "Recourse loans were half as likely to receive accommodation during the COVID-19 pandemic."
Agency costs. Freddie Mac's April 2026 fixed-rate term sheet pairs its non-recourse line with tax and insurance escrows and replacement reserve deposits that are "Generally required," and prepayment by "Yield maintenance until securitized followed by 2-year lock-out; defeasance thereafter." On amortizing or partial interest-only loans, leverage tops out at 80 percent loan-to-value with a 1.25x minimum amortizing debt coverage ratio on 7-year and longer terms, and the application fee is the greater of $2,000 or 0.1 percent of the loan amount. Fannie Mae's DUS term sheet requires stabilized occupancy, "typically 90%," for 90 days before funding, and offers "yield maintenance and declining prepayment premium." HUD's MAP Guide says the Section 223(f) program "limits prepayment during the first five years of the loan," and the annual mortgage insurance premium "is based on a percentage of the mortgage amount."
What do non-recourse carve-outs make you liable for?
Carve-outs create liability in two tiers under Freddie Mac's April 2026 loan agreement: the borrower owes the lender's actual loss when rents, insurance proceeds, records or the property itself are mishandled, and owes the entire loan after fraud, an unpermitted transfer or a voluntary bankruptcy filing. HUD's note lists a similar set of loss-based items.
Freddie Mac's Multifamily Loan and Security Agreement (revised April 20, 2026) starts from "Limited Recourse Generally," under which the lender's "only recourse" is the mortgaged property and other collateral, then adds liability back through a Base Recourse amount and two tiers of carve-outs:
- Base Recourse, defined as "a portion of the Indebtedness equal to ___% of the Loan Amount." Whatever fills that blank is recourse from day one; check it first.
- Loss or damage recourse (Section 3.03): failing to turn over rents and security deposits after a default, failing to keep insurance or to apply insurance and condemnation proceeds, failing to deliver required statements or records, waste or abandonment, and an unintentional written material misrepresentation, among other items.
- Full recourse (Section 3.05): the whole debt becomes personal if the borrower or its single-purpose equity owner voluntarily files for bankruptcy, if there is fraud or intentional written material misrepresentation, or if a prohibited transfer occurs, among other triggers.
The agreement says the borrower's liability limit "will not limit or impair Lender's enforcement of its rights against any Guarantor," defined as "the Person(s) required by Lender to guaranty all or a portion of Borrower's obligations." That signature is where a sponsor's own balance sheet enters a non-recourse loan.
HUD's multifamily Note (form HUD-94001M, OMB approval through December 31, 2027) says that on default the holder "shall look solely to the Mortgaged Property," but lists six events for which the borrower owes the lender's loss, including failing to pay over rents and security deposits after a default, a prohibited transfer or lien, and "fraud or written material misrepresentation."
A broader trigger can matter more than a lower rate. Have your own counsel compare the draft's recourse article with the term sheet before you sign; this guide explains structure and is not legal advice.
Which lender types offer non-recourse loans, side by side?
Side by side, non-recourse is written into the Freddie Mac, Fannie Mae and HUD program documents and is the documented CMBS norm, while large banks and SBA lenders rely heavily on personal recourse and credit unions must justify lending without a guarantee, and every non-recourse execution brings its own leverage, reserve and prepayment terms. Each row links its dated source.
Table: Recourse position and published terms by lender type (each row sourced and dated)
| Lender type | Recourse position (source's words or data) | Terms that come with it | Source and date |
|---|---|---|---|
| Freddie Mac Optigo (agency multifamily) | "Non-recourse except for standard carve-out provisions" | Up to 80% LTV at 1.25x DCR (7-year and longer, amortizing or partial interest-only); SPE borrower typically required; yield maintenance, then defeasance | Freddie Mac term sheet, April 2026 |
| Fannie Mae DUS (agency multifamily) | "Non-recourse execution is available" with carve-outs for "bad acts" | Stabilized occupancy, typically 90%, for 90 days; reserve, tax and insurance escrows typically required | Fannie Mae term sheet, read September 2026 |
| HUD-insured multifamily | Note "will contain a non-recourse provision as to the mortgagor entity" | Section 223(f) limits prepayment in the first five years; annual mortgage insurance premium | HUD MAP Guide, March 2021 revision |
| CMBS conduit | Non-recourse "outside of 'bad boy' clauses" | Majority of loans at 60% to 71% LTV; "prohibitive protections against prepayment" (loans originated 2012 to 2017) | Fed FEDS 2021-079, December 2021; FEDS 2019-079, September 2019 |
| Life insurance company | Not broken out; CRE lenders other than banks "overwhelmingly provide non-recourse loans" | Majority of loans at 50% to 67% LTV; lowest spreads of the three lender types studied (loans originated 2012 to 2017) | Fed FEDS 2021-079, December 2021; FEDS 2019-079, September 2019 |
| Bank (largest U.S. banks) | Roughly three-fourths of CRE loans carry full or partial recourse; 45% by value | Recourse loans: spreads at least 20 basis points lower, LTV around 3 points higher | Fed FEDS 2021-079, December 2021 |
| Credit union | May skip a personal guarantee if mitigating factors are documented | Each credit union sets its own underwriting criteria for guarantees | NCUA final rule summary, February 2016 |
| SBA 7(a) and 504 | Holders of at least 20% "generally must guarantee the loan" | SBA or the lender may require other guarantors regardless of ownership | 13 CFR 120.160, 2025 edition |
| Debt fund or bridge lender | No public source found; confirm in the term sheet | Ask whether a completion, interest-carry or other guaranty is required | No public source found as of September 2026 |
How do you get lenders competing for a non-recourse loan?
Lenders compete for a non-recourse loan when one complete file, with rent roll, operating statements, sponsor net worth and the single-purpose entity you plan to borrow through, reaches every lender type whose documents allow non-recourse at once, and you compare each quote's recourse terms, not just its rate. One option: submit the deal for review through a brokerage.
You can also take these questions to each lender type directly. YieldStack is a commercial mortgage brokerage, not a lender. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed. For what a non-recourse file needs before it goes out, see the non-recourse loan overview.
Whichever route you take, put the same four questions to every quote:
- What number fills the Base Recourse blank, if the documents have one?
- Which carve-outs make you liable only for the lender's loss, and which convert the whole loan to full recourse?
- Who must sign the carve-out guaranty, and what net worth and liquidity must that person show?
- What prepayment structure comes with the non-recourse execution: yield maintenance, defeasance, a declining premium or a lockout?
The bottom line
Non-recourse commercial real estate debt comes most reliably from the lender types that document it: the Freddie Mac and Fannie Mae multifamily programs, HUD-insured loans and CMBS. At the largest U.S. banks, roughly three-fourths of CRE loans carry recourse, concentrated in the smaller loans, and SBA's rule says 20 percent owners generally must guarantee. Walking away clean costs spread, leverage and prepayment flexibility, and the carve-outs decide how clean the walk really is. Compare the recourse article, not just the rate.