What is a Qualified Mortgage?

A Qualified Mortgage is a category of loans that have certain, more stable features that help make it more likely that you’ll be able to afford your loan.

A lender must make a good-faith effort to determine that you have the ability to repay your mortgage before you take it out. This is known as the “ability-to-repay” rule. If a lender loans you a Qualified Mortgage it means the lender met certain requirements and it’s assumed that the lender followed the ability-to-repay rule. 

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Generally, the requirements for a qualified mortgage include:

 A limit on how much of your income can go towards your debt, including your mortgage and all other monthly debt payments. This is also known as the debt-to-income ratio.

No excess upfront points and fees. If you get a Qualified Mortgage, there are limits on the amount of certain upfront points and fees your lender can charge. These limits will depend on the size of your loan. Not all charges, like the cost of a credit report, for example, are included in this limit. If the points and fees exceed the threshold, then the loan can’t be a Qualified Mortgage.

 

Certain legal protections for lenders. Your lender gets certain legal protections when showing that it made sure you had the ability to repay your loan. Even with these protections, you may still be able to challenge your lender in court if you believe it did not make sure you had the ability to repay your loan.

Tip: If you have a problem with your mortgage, you can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372).