What is a Qualified Mortgage (QM)?

A Qualified Mortgage (QM) is defined as a mortgage that meets specific regulatory requirements aimed at protecting both consumers and lenders. The establishment of the QM framework was enacted to promote responsible lending practices, ensuring that borrowers have the ability to repay their loans without facing undue financial distress.

Key features of a QM include limits on fees and points, ensuring that income and assets are verified, and capping the amount of risky features allowed, such as negative amortization or interest-only payments. These protections are intended to reduce the risk of foreclosure for consumers and to enhance the stability of the lending market. By adhering to these guidelines, a QM provides a safer borrowing environment, promoting economic stability and responsible lending.

The other options do not accurately represent the characteristics or intent behind Qualified Mortgages. High interest rates don't define a QM, nor does non-compliance with regulations or the nature of personal loans.