Ability To Repay and QM

Question 1

What is the Ability to Repay rule and what does it do?

Answer 1

It’s a rule established in order to ensure that lenders verify the borrowers ability to repay using reasonable metrics before extending credit.

It requires creditors to assess the ability of the borrower to make monthly payments, using figures calculated with the highest rate that may result from the terms of the loan, and taking into account:

• credit history
• income
• debt
• DTI and Housing ratios