Non-Recourse Loan

Definition

A loan where the lender's only recourse upon default is to seize the collateral (the property); they cannot pursue the borrower's other assets. Basically, the bank gets the house or nothing—making borrowers sleep better and lenders stress more.

Example Usage

The commercial mortgage was non-recourse, so we had limited personal liability if the project failed.

Origin

From legal terminology distinguishing loan types by recourse rights

Fun Fact

Non-recourse loans typically carry higher interest rates because lenders assume more risk—but savvy investors love them because they limit downside exposure.

Source: Commercial lending and real estate finance

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