DSCR Prepayment Penalties
Many DSCR loans carry a prepayment penalty for the first few years. Knowing the structure up front protects your exit plan.
Common structures
- Step-down: the penalty shrinks each year, for example from 5% down to 1%
- Fixed percentage: the same penalty for a set number of years
- No penalty: available on some programs, usually at a different price
Why it matters
If you plan to sell or refinance within a few years, the penalty can outweigh a slightly better rate. Match the penalty period to your hold time.
Ask before you lock
What triggers the penalty, how long it lasts and whether a partial paydown counts.
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