![]() Limiting debt-to-income ratios: Limits on how much of your income can go toward paying off debts, including your mortgageĪ non-QM loan doesn’t meet some aspects of the above criteria.Placing caps on fees and points: Limits on the upfront points and fees the borrower will have to pay the lender, depending on the size of the loan.Negative amortization: A situation in which your loan principal increases even though you’re making payments.Balloon payments: When you owe a larger than normal payment at the end of a loan term.Interest-only periods: When you pay only interest and no principal on a loan for a period of time. ![]() Declining to issue loans with risky features, such as:.Lenders who issue qualified mortgages do that by following the general requirements laid out by the Consumer Financial Protection Bureau, which include: These standards are based on the borrower’s ability to repay their mortgage according to their financial record.Įvery mortgage lender has a responsibility to follow the ability-to-repay rule and make an effort to ensure you’ll be able to repay your mortgage. A qualified mortgage is a mortgage that is granted based on the borrower’s ability to meet government standards. ![]() In order to define non-QM loans, you have to first understand what qualified mortgages are. If you don’t fit the description of the typical borrower, a non-qualified mortgage (QM) might be your answer to financing a home.
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