Qualified Mortgage Rules Proposed: 20% Down?

Most lenders think rules are too strict.  Here is a quick outline…
Underwriting Standards of Qualified Residential Mortgage (QRM)
  • 28/36 maximum ratios
  • Max LTV of 80% Purchase and 75% CLTV for Refis and 70% Cash Out
  • 20% down payment for purchase transaction
  • No 60-day late within 24 months (on any debts)
  • Mortgage insurance does not increase quality of loan: therefore does not count
  • Exemptions for “government guaranteed” assets: Fannie, Freddie, FHA, VA, Rural Housing
  • No “non-traditional” products (interest only, negative am)
  • Those mortgages  not qualified will need 5.0% risk retention…several ways of meeting the 5.0% standard

The result?  Higher rates, fewer choices for “non-conforming” products. And if Fannie/Freddie goes away?

Remember, these are not final.


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