New Qualified Mortgage Rules for 2014
There are new mortgage rules applying to Qualified Mortgages originated on or after January 10th, 2014, and we want to give you an overview.
First of all, what’s a Qualified Mortgage (QM)?
A QM is a home loan that has stable features to make it easier for you to repay your loan. A loan must meet 3 requirements in order to be considered “qualified”: the lender must determine that the buyer has an Ability To Repay (ATR), the cost of the loan must meet certain requirements and the loan must not include any restricted risky features, such as interest-only payments.
How can my Ability to Repay (ATR) be determined?
The general rule of thumb for ATR is a 43% debt-to-income ratio. Debt-to-income (DTI) ratio is the percentage of your monthly gross income that goes toward paying off your home and your other debts. The Consumer Financial Protection Bureau has 8 factors that a lender must consider when measuring a borrower’s ATR: