Do all DSCR loans have a prepayment penalty?

No, but most do. The standard DSCR loan carries a step-down prepayment penalty in the early years. Many lenders offer a no-prepayment-penalty option, and you pay for it with a higher interest rate. Whether that trade is worth it depends on how soon you plan to sell or refinance.

When is a no-prepay DSCR loan worth the higher rate?

When your hold is short. If you plan to sell or refinance within the penalty window, the penalty you would pay can exceed the extra interest from a no-prepay loan. On a long-term hold, the standard loan with the lower rate usually wins. Run both before you choose.

Lender guide

Best DSCR Lenders With No Prepayment Penalty (2026)

Most DSCR loans lock you in with a prepayment penalty for the first few years. If you plan to sell or refinance soon, a no-prepay option can be worth the higher rate it costs. Here is how to choose.

By Owen Brandt, Research Editor. Updated June 13, 2026.

Most "no prepayment penalty" lender lists are written by a lender or an affiliate paid to rank one. We do the opposite: we show you how to judge whether no-prepay is worth paying for, so you can choose a lender yourself. Where we link to a lender, we say so. See our disclosure.

How DSCR prepayment penalties work

The standard DSCR loan carries a step-down prepayment penalty, often five percent of the balance in year one, falling a point each year. It exists because the lender is pricing a long hold. For the full structures, read DSCR loan prepayment penalties.

The no-prepay trade

Many lenders will remove or shorten the prepayment penalty in exchange for a higher interest rate, or let you buy the penalty down. The decision is a break-even:

Short hold. If you will sell or refinance within the penalty window, the penalty you would otherwise pay can outweigh the extra interest. No-prepay wins.
Long hold. If you are holding for years, the lower rate on the standard loan usually beats paying up for a flexibility you will not use.

This matters most for fix-and-flip-to-rent transitions and for properties you might refinance soon. See can you refinance a DSCR loan.

The five things to confirm

No-prepay availability. Does the lender offer it, and as a rate add or a buy-down?
The exact rate difference. Get the no-prepay rate next to the standard rate.
Soft versus hard penalty on the standard loan. A soft penalty waives on a sale; a hard one applies to both sale and refinance.
Your real hold period. Be honest about how long you will keep the loan.
Pricing for your tier. Compare quotes for your actual credit and ratio.

Established lenders to research

These national investor lenders commonly offer prepayment options. We list them as starting points to research, not endorsements, and you should confirm the no-prepay terms and pricing directly.

Compare prepayment options. Confirm terms on each lender's site. Some links may be affiliate links; see our disclosure.

Kiavi New Silver Visio Lending

Before you choose

Estimate your real hold period, then weigh the penalty against the higher no-prepay rate using the DSCR calculator, and check your standing with the pre-qualifier.