Explanation:

- He paid his debts down to the last penny.

- This is correct. "Down to the last penny" is a common idiom meaning paying exactly the full amount.

- He paid his debts over to the last penny.

- "Over to the last penny" is not a standard expression and does not fit well in this context.

- He paid his debts full to the last penny.

- "Full to the last penny" is awkward. The use of "full" without a preposition here is incorrect.

- He paid his debts fully to the last penny.

- This could work, but it's less common than "down to the last penny."

The correct answer is: Option 1 - down