According to the CFPB, what is a qualified mortgage?

A qualified mortgage is defined as a residential mortgage that meets specific criteria set forth by the Consumer Financial Protection Bureau (CFPB). These criteria are designed to ensure that borrowers can repay their loans, promoting responsible lending practices. A qualified mortgage typically includes features such as limits on points and fees, no risky features like interest-only payments, and documentation that demonstrates the borrower’s ability to repay the loan.

This designation serves to protect consumers, as it reduces the likelihood of mortgage defaults and contributes to the overall stability of the housing market. By adhering to these standards, lenders can offer loans that are less likely to result in significant financial distress for borrowers, thereby fostering a safer lending environment.

The other options do not accurately define what constitutes a qualified mortgage. For instance, a mortgage with no minimum standards does not align with the regulatory framework intended to promote responsible lending. Similarly, a subordinate mortgage or loan that requires no down payment may exist, but they do not meet the specific criteria established for a qualified mortgage.