What is a DSCR prepayment penalty?

A prepayment penalty is a fee charged if you pay the loan off during an initial window, most often by selling or refinancing early. These structures are common on DSCR loans because they are business-purpose loans, and investors can often choose among longer, shorter, or reduced penalty options, trading pricing against flexibility. The sensible choice follows your exit plan: a long-term hold can usually accept a longer structure comfortably, while a planned near-term sale or refinance argues for a shorter one. State law limits or bars these penalties in some places, so geography matters too, depending on the program. Our DSCR program page explains the structures typically offered.