Q: Are there different types of Qualified Mortgages (QMs)?
A: There are four types of QMs.
- Two types of QMs, the General and Temporary QMs, can be originated by any creditor, regardless of the creditor’s size.
- Two additional types of QMs, Small Creditor and Balloon-Payment QMs, can be originated only by small creditors.
For all four types, QMs that are higher-priced receive a rebuttable presumption and QMs that are not higher-priced receive safe harbor status. However, the definition of “higher-priced” is different for Small Creditor and Balloon-Payment QMs.
Some requirements are common across all four types of QM. These requirements include:
A prohibition on negative amortization or interest-only payments
A prohibition on loan terms in excess of 30 years
Limitations on points and fees: The threshold is generally 3 percent of the loan balance but larger amounts are allowed for loans under $100,000