Non-recourse caps downside at the equity, subject to bad-boy carve-outs, usually costs more in spread, and is the structure used at higher leverage. Recourse is more common on lower-leverage bank loans.
When does recourse make sense?
Lower-leverage deals where downside is genuinely limited (stabilized cash-flowing multifamily or industrial), banking-relationship execution where cross-sell value justifies recourse exposure, and small balance loans where the universe of non-recourse lenders is thin or expensive.
When is non-recourse worth the premium?
Higher-leverage deals (above 65 percent LTV), riskier asset profiles (transitional, hotel, office), and any deal where sponsor net-worth concentration creates unacceptable personal exposure. Most institutional sponsors require non-recourse as a matter of policy regardless of pricing differential.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1