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> A non-recourse interest only loan is a bit batshit however. Not as crazy as you think as that’s pretty much what the FHA does with consumer mortgages in non-
by koolba 3y ago
> A non-recourse interest only loan is a bit batshit however.
Not as crazy as you think as that’s pretty much what the FHA does with consumer mortgages in non-recourse States. It’s not quite zero but I think it goes as low as 3.5% down.
You can almost create this position synthetically by getting a non-recourse loan for the bulk of the purchase, and an unsecured loan (at a higher rate) for what would normally be the down payment. You end up with two loans to repay, one of which is tied to the property and other purely to your good faith and credit. The latter would have a claim for non-repayment but it could be much smaller than the full property price and need not even be anything close to 20%.
- bombcar 3y agoTrue, but in that case the VA and FHA loans are explicit government attempts to get people into homes. And they do get a bit spicy when home values decrease.
- ptero 3y agoFor home loans, even non recourse, it is not a purely financial transaction. Defaulting on a loan stays on your credit report for a while and might not only hit your chances of getting another loan, give a (small) hit to your job search (especially if you apply to a company outside US that would run a credit check), etc.