3-2-1 Step-Down Prepayment Penalty
Bottom Line Up Front (BLUF): Ideal for value-add BRRRR and medium-term rental investors who anticipate refinancing or selling in Years 3–4 without paying a Year-4 or Year-5 penalty.
Underwriting Formula / Rule
Months 1–12: 3% | Months 13–24: 2% | Months 25–36: 1% | Month 37+: 0%.
Wholesale Shelf Benchmark
Available across 90%+ of wholesale DSCR shelves.
Frequently Asked Underwriting Questions
Does a 3-2-1 prepay allow partial principal curtailment?
Many wholesale notes allow paying down up to 20% of the original principal balance per year without triggering the prepayment fee.
Arranged by Loan Daddy LLC (NMLS #2827624 · (480) 485-1229 · quotes@loandaddy.ai). Business-purpose investment properties only.