Recourse Burnoff Calculator

Many construction loans include recourse burn-off schedules: recourse drops from 100% → 50% → 25% → 0% as milestones hit. This calculator tracks current recourse level.

Loan amount

Initial recourse %

Milestone 1 recourse %

Milestone 2 recourse %

Milestone 3 recourse %

Stage 0-3 (0=start, 3=stabilized)

Current recourse exposure

$10,000,000

Current recourse %

50.00%

Amount burned off

$10,000,000

How the math works

Recourse = loan × current % at milestone stage. Burn-off schedule reduces sponsor exposure automatically as project de-risks.

Negotiate burn-off aggressively at loan closing. Milestones should be achievable and measurable (CO received, DSCR certified, etc). Vague milestones = lender refusal to burn off.

How to Use

Enter initial recourse %.
Enter milestone burn-off percentages.
Enter current completion %.
Read current recourse exposure.

Frequently Asked Questions

How does burn-off work?

Typical schedule: 100% at closing → 50% at certificate of occupancy → 25% at DSCR 1.15x → 0% at stabilization. Negotiate specific milestones tied to measurable achievements.

Is full burn-off common?

Yes on traditional construction-to-perm. Less common on bridge or land-only. Burn-off is a key negotiation point for institutional sponsors.

What if milestones missed?

Recourse stays at prior level. Sponsor remains personally liable. Lenders sometimes negotiate 'freeze' (stays at current) vs 'reset' (goes back to 100%) on significant delays.

When does a lender negotiate vs foreclose?

Lenders calculate their net recovery from foreclosure (asset value minus legal, time, and sale costs) and compare to any workout proposal. If your offer nets the lender more than foreclosure, and you present it with clear sources of capital, most lenders will engage. Bring a credible sponsor, documented sources, and a timeline — vague asks get declined. Build the relationship before distress, not after.