Qualified Mortgage (QM)
A category of mortgages meeting CFPB safety standards: limits on points/fees, no risky features, and a verified ability-to-repay analysis.
Qualified Mortgage is a CFPB-defined category that gives lenders legal "safe harbor" against borrower lawsuits claiming the loan was unaffordable. QM loans must meet specific tests: documented income (no stated-income), DTI under 43% (or general QM rate-spread test), no negative amortization, no interest-only or balloon features, and points/fees under 3% of loan amount. Most agency loans (Fannie/Freddie/FHA/VA/USDA) are QM. Non-QM loans are everything else — bank statement, P&L, asset depletion, DSCR, etc.
Related terms
Non-QM (Non-Qualified Mortgage)
Mortgages that fall outside Qualified Mortgage rules — typically used for self-employed, foreign-national, or investor borrowers.
Ability-to-Repay (ATR)
Federal rule requiring mortgage lenders to verify a borrower's ability to repay before originating a consumer-purpose loan.
DTI (Debt-to-Income Ratio)
Your monthly debt payments divided by gross monthly income. The primary qualification metric for most mortgage programs.
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