Are Prepayment Penalties Allowed on DSCR Loans in New Mexico?

[Robin Simon]

Prepayment Penalty Rules for DSCR Loans in New Mexico

Prepayment Penalties are Not Allowed on DSCR Loans in New Mexico. Under N.M. Stat. § 56-8-30, any "home loan," defined to include mortgages on one-to-four unit residential properties and real estate contracts, cannot include a prepayment penalty or premium. Courts have affirmed this applies to all real estate-secured loans, without distinguishing owner-occupancy or investment purpose. Therefore, even for DSCR Loans, that are strictly business purpose, lenders cannot legally impose a prepayment penalty. DSCR Lenders cannot offer prepayment penalty options in New Mexico, except potentially for multifamily (5+ unit) or mixed-use properties in the Land of Enchantment.

FULL Complete 2026 Guide To DSCR Loan Prepayment Penalties

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