Many DSCR loans include prepayment penalties. See common structures and how Indiana investors plan exits and refinances.
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DSCR Prepayment Penalties
Yes — many DSCR loans include prepayment penalties. Investors accept PPP in exchange for better rates — and plan exits and refinances around the window.
Prepayment penalties (PPP) compensate investors when loans pay off early — before they earn expected yield. On DSCR, accepting a PPP often improves your rate, which is why most investors include them by default.
Common structures run 3–5 years with declining percentages — such as 5-4-3-2-1 or 3-2-1. Soft vs. hard prepay rules determine whether selling without penalty is allowed while refinancing still triggers a fee.
PPP terms are investor-specific — confirm exact language before you lock.
Know the schedule before you plan a sale or refinance.
Match PPP length to how long you realistically hold the asset.
An Indiana investor in year two of a 5-4-3-2-1 PPP faces a 4% penalty on the remaining balance to refinance early. If the new rate saves $200/month, we calculate how many months of savings it takes to break even against the penalty — and whether waiting one more year is smarter.
Never assume PPP language is identical across investors. We confirm soft vs. hard and sale exceptions before you lock.
1. Confirm PPP length and declining schedule
2. Ask soft vs. hard and sale exceptions
3. Compare rate at different PPP options
4. Map your realistic hold or refinance timeline
5. Read partial paydown rules in the note
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Ryan & Steve will compare PPP options against rate and map your hold or refinance timeline before you lock.