If you are looking for financing for an investment that will be owned by your Solo 401k, to comply with laws and regulations it must be a non-recourse loan.
A non-recourse loan is a loan secured only by the property as collateral, with no personal guarantee.
The reason the loan must be non-recourse is a Solo 401k participant cannot personally guarantee a loan for the 401k. Also, the other assets of the borrower (the Solo 401k) cannot used to secure the loan.
With a non-recourse loan, ff there’s a default, there is no recourse to collect the loan from the Solo401k owner personally or the Solo 401k itself other than to foreclose on the property.
Since this is a special type of loan, the down payment is usually larger and it’s typical for Solo 401k to put down 30-50%.
For a non-recourse lender±usually a bank—to approve the loan, they will usually require strong rental income from the property. Make sure you’re getting into a good deal with strong rental income that can make the mortgage payment and have a buffer for any repairs or maintenance.
Non-recourse loans are available for
Residential properties (single-family, multi-family, and apartments)
Farm land with income
Loans are available in all 50 states to Solo401k.com accountholders and your property can be inside or outside of the US.