Next Friday January 10th the “Qualified Mortgage” rules go into effect. The Department of Housing and Urban Development defines “QM” loans as meeting the following requirements: “require periodic payments without risky features; have terms not to exceed 30 years; limit upfront points and fees to no more than three percent with adjustments to facilitate smaller loans.” Lenders must demonstrate that the applicant meets ability to pay standards including a debt-to-income ratio of no more than 45%. Loans that are certified as “QM” provide safe harbor for lenders against borrower litigation. It is important for home shoppers to meet early with a lender to assess their mortgage qualifications.
