Are Prepayment Penalties Allowed on DSCR Loans in Washington?

[Robin Simon]

Prepayment Penalty Rules for DSCR Loans in Washington

Prepayment Penalties are Fully Allowed with no restrictions for DSCR Loans in Washington. Washington law only prohibits prepayment penalties on residential mortgage loans “secured by a dwelling with intent to occupy” under RCW 19.144.040. This restriction is strictly limited to owner-occupied properties so DSCR Loans, strictly secured by investment properties with business-purpose usages only, are not affected. As such, DSCR Lenders can typically offer all standard prepayment penalty options such as Descending Prepay Penalties (i.e. “3/2/1”), Flat Prepay (i.e. “5/5/5/5/5”) or even California-Style (i.e. “6 Months Interest, 20% Freely Prepayable, 5 Year Duration”) and other tailored structures in the Evergreen State.

FULL Complete 2026 Guide To DSCR Loan Prepayment Penalties

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