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What kind of loan can I get to buy real estate in the Solo 401k?

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)

  • Commercial property

  • 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.

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