Prepayment Penalty Rules for DSCR Loans in Virginia

Prepayment Penalties are Fully Allowed for DSCR Loans with Loan Amounts over $75,000 in Virginia, with a maximum 1% penalty fee allowed for Loans under that threshold. Virginia imposes prepayment penalty restrictions only on smaller loan amounts. Under Va. Code § 6.2-421(B), loans secured by real estate with balances under $75,000 are limited to a 1% maximum prepay penalty. This threshold applies at any time during the penalty period, not just at origination. However, DSCR loans above $75,000, which represent the overwhelming majority of Virginia DSCR Loans and is above the vast majority of DSCR Lenders overall loan minimums anyway, face no state-level restrictions.

As such, DSCR Lenders in practice 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 Virginia, however limitations to 1% fees may apply in rare cases for DSCR Loans with very small balances (under $75,000) in Old Dominion.

FULL Complete 2026 Guide To DSCR Loan Prepayment Penalties

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