A Pennsylvania DSCR loan is business-purpose financing on a 1-4 family rental, secured by a mortgage and foreclosed in court. On a 1- or 2-unit property at or below the annual base figure, Act 6 of 1974 bars prepayment penalties.
Pennsylvania's Act 6 is the rule investors most need to know here. It is written around the property and the loan size, not the borrower's purpose, so a small duplex loan can fall under it even when it's business-purpose credit.
If you're refinancing a finished Pennsylvania flip, start with the seasoning questions to ask.
Does Pennsylvania limit prepayment penalties on rental property loans?
Act 6 of 1974, Section 405, lets residential mortgage obligations be prepaid without penalty, and a residential mortgage is a loan at or below the base figure on Pennsylvania property with not more than two residential units. The Pennsylvania Department of Banking and Securities lists the 2026 base figure as $329,411.
| Loan | Act 6 Section 405 |
|---|---|
| 1-2 unit property, original principal at or below the base figure | No prepayment penalty |
| 3-4 unit property | Outside the two-unit definition |
| Above the base figure | Outside the definition |
Exception: Section 405 contains no business-loan exclusion and refers to the obligation, not the borrower, but the Act defines a residential mortgage debtor as a non-corporate borrower, so an LLC or corporate borrower should not assume the protection applies. The base figure resets every year. Ask the lender and get the answer in writing.
According to Act of Jan. 30, 1974, P.L. 13, No. 6, Pennsylvania General Assembly, and the Department of Banking and Securities Act 6 information page, as of October 2026.
How are rental property loans foreclosed in Pennsylvania?
Pennsylvania mortgage foreclosure is a court action conducted under the rules governing civil actions, under Pennsylvania Rule of Civil Procedure 1141.
- Rule 1141 defines the action as one to foreclose a mortgage upon any estate, leasehold or interest in land.
- The procedure follows the rules relating to a civil action.
Exception: Ask a Pennsylvania attorney how sale timing affects your plan for a specific property.
According to the Civil Procedural Rules Committee publication quoting Pa.R.C.P. 1141, Unified Judicial System of Pennsylvania, as read October 2026.
What Pennsylvania landlord rules affect a rental property's numbers?
Pennsylvania caps a security deposit at two months' rent in the first year of a lease and one month's rent in later years or on renewal, and requires a written list of damages within 30 days after the lease ends, under the Landlord and Tenant Act of 1951.
| Lease year | Maximum deposit (Section 511.1) |
|---|---|
| First year | 2 months' rent |
| Second year and later, or renewal | 1 month's rent |
Exception: Under Section 512, a landlord who misses the 30-day list loses the right to withhold the deposit. Read the full section before you collect or keep a deposit.
According to Landlord and Tenant Act of 1951, P.L. 69, No. 20, Pennsylvania General Assembly, as of October 2026.
Local guides for Pennsylvania: Philadelphia, Pittsburgh.
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Disclaimer
This page is general education about business-purpose real estate financing and state law as published by official sources on the date shown. It is not legal, tax or lending advice, not an offer to lend and not a rate quote. Laws and lender guidelines change; confirm current rules with the lender, the title company and your own attorney or tax adviser.