Reg Z QM – Are there special requirements for calculating the DTI ratio on QM loans?

Compliance > Regulation Z - TILA > Ability to Repay / Qualified Mortgages
Q:  Are there special requirements for calculating the DTI ratio on Qualified Mortgage (QM) loans?
 
A: The General QM definition requires that a consumer’s total debt-to-income ratio not exceed 43 percent. Section 1026.43(e)(2)(vi) and appendix Q of the ATR/QM rule contain the definitions of debt and income for purposes of the General QM definition.
 
Keep in mind that different DTI rules apply to loans complying under the ATR standard and to the other QM definitions:
 
  • To satisfy the general ATR standard, you must consider DTI or residual income.
  • To originate a QM under the temporary definition (eligible for sale to or guarantee by a GSE or insured or guaranteed by a specified federal agency), you must meet the relevant entity’s applicable DTI and other requirements.
  • To originate a Small Creditor or Balloon-Payment QM, you must consider DTI or residual income, but you do not have to meet a specific threshold requirement.
     
     
ADDITIONAL INFORMATION – CFPB ATR/QM Compliance Guide - http://files.consumerfinance.gov/f/201603_cfpb_atr-qm_small-entity-compliance-guide.pdf
 

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