Non-QM Mortgage Navigator
Non-QM Prepayment Penalties
A prepayment penalty is not a defining feature of Non-QM lending. Whether one may be offered depends on the loan's purpose, occupancy, product structure, applicable federal rules, state law and investor requirements.
Consumer and business-purpose loans differ
Owner-occupied consumer mortgages and business-purpose investment loans can be governed by different restrictions. Do not transfer a feature from one category to the other.
State law matters
State restrictions can be more limiting than an investor's general program description.
Terms must be reviewed
If a product includes a permitted prepayment provision, review the actual duration, calculation and exceptions in the loan documents.
Never assume
The absence or presence of a prepayment penalty must be confirmed for the specific transaction and jurisdiction.
MortgageDadOf3 guardrail: Non-QM is not one universal guideline. Exact credit, LTV, DTI, reserves, documentation, property, pricing and state eligibility can vary by lender, investor and product. Consumer-purpose loans also remain subject to applicable federal and state law.