Prepayment & Exit

3-2-1 Step-Down Prepayment Penalty

A 3-year declining prepayment penalty charging 3% in Year 1, 2% in Year 2, 1% in Year 3, and 0% after Month 36.

Underwriting Formula / Rule

Months 1–12: 3% | Months 13–24: 2% | Months 25–36: 1% | Month 37+: 0%.

Detailed Credit-Committee Impact & Thresholds

Ideal for value-add BRRRR and medium-term rental investors who anticipate refinancing or selling in Years 3–4 without paying a Year-4 or Year-5 penalty.

2026 Wholesale Benchmark: Available across 90%+ of wholesale DSCR shelves.

Related Underwriting Terms

Debt Service Coverage Ratio (DSCR)Form 1007 Single-Family Comparable Rent Schedule Form 1025 Small Residential Income Property Appraisal Report 5-4-3-2-1 Step-Down Prepayment Penalty Yield Maintenance Prepayment Provision No-Ratio / Sub-1.00x DSCR Loan