Qualified Mortgage (QM)

A Qualified Mortgage (QM) is a category of home loans that meet specific criteria set by the Consumer Financial Protection Bureau (CFPB) to ensure that borrowers have the ability to repay. QMs must follow guidelines that limit risky loan features, such as excessive fees, interest-only payments, or balloon payments. These loans offer legal protections to lenders, reducing liability if the borrower defaults. For a lender, ensuring a loan meets QM standards is essential for compliance and minimizing risk in the lending process.