Do Investment Property Loans Require Personal Guarantees?

This surprises investors who formed an LLC specifically for separation. Here is what the guarantee actually is, what it does and does not undo, and where the exceptions live.

What a Personal Guarantee Means

Your LLC is the borrower; you sign a guarantee making yourself personally responsible if the entity defaults. On DSCR, fix-and-flip, and bridge loans, any member owning roughly 20–25%+ of the entity typically signs. The lender underwrote the property’s income, but the guarantee is their backstop.

Does It Defeat the Purpose of the LLC?

No — and this is the part worth understanding. The guarantee runs one direction: to the lender, on this loan. Your LLC still does its other jobs — separating the property’s liabilities (a tenant lawsuit stays with the entity), keeping the asset off your personal name in public records, cleaner partnerships and accounting, and simpler estate planning. You gave the lender recourse; you did not give it to everyone else.

Recourse vs. Non-Recourse, Honestly

• Recourse (standard): nearly all residential investor loans — DSCR, flip, bridge — carry full personal guarantees.
• Non-recourse: generally the territory of larger commercial and agency multifamily debt, and even there with “bad-boy carve-outs” — fraud or misrepresentation makes it personal again.
• What moves the needle: lower leverage, strong DSCR, and experience can occasionally soften guarantee structures at the margins, but plan on signing one for residential investor deals.

What Guarantors Get Reviewed On

Credit score and history, reserves, and real estate experience — not income. The guarantee brings your credit profile into the file; it does not bring your tax returns. That is why DSCR loans stay documentation-light even with a full guarantee attached.

Frequently Asked Questions