Prepayment Penalty Rules for DSCR Loans in Louisiana

Prepayment Penalties are Fully Allowed with no restrictions for DSCR Loans in Louisiana. Louisiana law permits prepayment penalties on consumer-purpose residential loans, capped at 5% in year 1, then 4 %, 3 %, 2 %, 1 % through year 5 (La. Rev. Stat. § 9:3532.1). However, those limits apply only to consumer loans secured by real estate, and DSCR Loans, not considered consumer loans, but instead classified separately as business-purpose loans, are not covered by these rules. Consequently, DSCR Lenders in Louisiana are not only free to employ typical Descending Prepay Penalties (i.e. “5/4/3/2/1”), but can offer all standard prepayment penalty options as well, including Flat Prepay (i.e. 5/5/5/5/5) or even California-Style (i.e. 6 Months Interest, 20% Freely Prepayable, 5 Year Duration) for DSCR Loans in the Pelican State.

FULL Complete 2026 Guide To DSCR Loan Prepayment Penalties

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