Non-recourse from debt funds costs more but caps the sponsor's downside at the equity contribution. Bad-boy carve-outs apply to both structures.
When is recourse acceptable?
Sponsors with strong banking relationships, conservative leverage (60 to 65 percent LTV), and asset profiles where downside is genuinely limited (stabilized multifamily, industrial). The 100 to 200 basis points of pricing savings on a 24-month bridge can equal $300,000 to $700,000 on a $30 million loan, meaningful for the sponsor.
When does non-recourse win?
Higher leverage (above 70 percent), riskier asset profiles (transitional hotel, office, retail), or any deal where sponsor net worth concentration creates unacceptable personal exposure. Most institutional sponsors prefer non-recourse as a matter of policy regardless of pricing.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1