Creditors should bear in mind, however, that QMs generated under the temporary QM category that are eligible for purchase by Fannie Mae or Freddie Mac need not comply with the 43 percent DTI ratio
, which will preclude a challenge on that basis for many loans.
A broader measure of debt burden is the overall DTI ratio
, which includes mortgage and non-mortgage debt in the numerator.
any loan that meets the product feature requirement, and is eligible for purchase, guarantee or insurance by a GSE, FHA, VA or USDA, regardless of the DTI ratio
(GSE qualification applies as long as the GSEs are in Federal Housing Finance Agency [FHFA] conservatorship, or until Jan.
Borrowers with an annual income of less than $80,000 must have a DTI ratio
of less than, or equal to, 39%.
borrower's monthly DTI ratio
or residual income; and
However, the back-end DTI ratio
field was missing for this group.
Before modification, the median back-end DTI ratio
However, in this deal the back-end DTI ratio
field was missing.
There are also several escalating options, depending on the DTI ratio
Under the two proposals, the determination of an affordable payment is almost identical, using a front-end DTI ratio
without full consideration or verification of the borrower's total financial circumstances.
4) Change in DTI Ratio
: Back-end DTI ratio
data is generally more available than front-end data in the data files provided by mortgage issuers.
QM standards also include a 3 percent limit for points and fees; a maximum term of 30 years or less, and a cap of 43 percent on the back-end DTI ratio
, among other requirements.