Prepayment & Exit

5-4-3-2-1 Step-Down Prepayment Penalty

A 5-year declining prepayment fee structure charging 5% in Year 1, 4% in Year 2, 3% in Year 3, 2% in Year 4, 1% in Year 5, and 0% thereafter.

Underwriting Formula / Rule

Exit Prepay Fee = Remaining Principal Balance × Active Year Step-Down % (5%, 4%, 3%, 2%, or 1%).

Detailed Credit-Committee Impact & Thresholds

Business-purpose DSCR loans are securitized in institutional Non-QM bond pools that rely on predictable duration. A 5-4-3-2-1 step-down prepayment penalty protects investor bond yield for 60 months while stepping down 1% each anniversary.

2026 Wholesale Benchmark: Standard on long-term buy-and-hold DSCR loans; 3-2-1, 2-1, and 1-year options available for shorter horizons.

Related Underwriting Terms

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