A type of financing (loans) in which recourse to a borrower’s other assets is not allowable. In the event a borrower fails to fulfill the terms of a loan, the lender will be only limited to foreclosing on the underlying asset (e.g., real estate property) financed by the loan. In this sense, foreclosure represents the only means possible for a full and complete satisfaction of the loan’s terms. The lender cannot enforce on the borrower’s other assets (by any means including deficiency judgement).

Nonrecourse financing is also known as a nonrecourse loan.