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Are Prepayment Penalties allowed on DSCR Loans in Texas?
#1 Private Lending & Conventional Mortgage Advice Contributor
- Lender
- Austin, TX
Prepayment Penalty Rules for DSCR Loans in Texas
Prepayment Penalties are Fully Allowed with no restrictions for DSCR Loans in Texas. Texas does not impose statutory limitations on prepayment penalties for business-purpose loans like DSCR Loans. The Texas Finance Code (§302 et seq.) addresses interest and usury for consumer lending, but explicitly excludes loans made primarily for business, commercial, or investment purposes, which clearly include DSCR Loans. As such, DSCR Lenders can typically offer all standard prepayment penalty options such as Descending Prepay Penalties (i.e. “5/4/3/2/1”), Flat Prepay (i.e. 5/5/5) or other tailored structures in the Lone Star State.
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