How does QM relate to loan affordability?

The focus of Qualified Mortgages (QM) is to ensure borrower affordability by establishing standards that help to assess a borrower's ability to repay the loan. QM guidelines include factors such as a borrower's debt-to-income ratio, stable income and employment history, and other underwriting criteria that are designed to prevent borrowers from being approved for loans they cannot afford. This framework protects both borrowers and lenders by promoting responsible lending practices, thus minimizing the risk of defaults and foreclosures. By prioritizing affordability, QM aims to enhance the stability of the housing market and ensure that borrowers are not taking on more debt than they can manage.