# Qualified Mortgage (QM)

> A Qualified Mortgage meets CFPB rules that bar risky features and cap points and fees, giving the lender legal protection under the ability-to-repay rule.

URL: https://mail.mortgage-math-us.com/glossary/qualified-mortgage/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

**A Qualified Mortgage (QM)** is a home loan that meets the CFPB’s Regulation Z standards for safer features and limited upfront costs. In return, the lender gets legal protection — a safe harbor or a rebuttable presumption — that it complied with the [ability-to-repay rule](https://mail.mortgage-math-us.com/glossary/ability-to-repay/).

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Longest term allowed | 30 years | [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) | Jan 7, 2025 |
| Points-and-fees cap (larger loans) | 3% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold |
| General QM price limit over the average prime offer rate | 2.25% | [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) | 2026 threshold |
| Prepayment penalties end after | 3 years | [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) | Oct 28, 2026 |

## What a QM can’t have

- Interest-only payments, negative amortization or, except for some small lenders, a [balloon payment](https://mail.mortgage-math-us.com/glossary/balloon-payment/)
- A term longer than 30 years
- Points and fees above 3% of the loan on larger loans (smaller loans have higher limits)
- For a General QM on a larger first-lien loan, an APR 2.25% or more above the average prime offer rate

A [prepayment penalty](https://mail.mortgage-math-us.com/glossary/prepayment-penalty/) is allowed only on fixed-rate QMs that aren’t higher-priced, and only in the first 3 years. A General QM no longer has a fixed debt-to-income cap, but the lender must still consider your DTI or residual income — see the [debt-to-income guide](https://mail.mortgage-math-us.com/buying/debt-to-income/).

## Example: the points-and-fees test

On a $400,000 loan, points and fees counted under the rule — including origination charges and discount points, with some exclusions — can total no more than $12,000. If they go higher, the loan can’t be a QM.

## Related terms

- [Non-QM loan](https://mail.mortgage-math-us.com/glossary/non-qm-loan/)

## Sources

- [CFPB, Federal Register 90 FR 57890](https://www.federalregister.gov/documents/2025/12/15/2025-22773/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-qualified) — Qualified Mortgage points-and-fees cap (loans of $137,958 or more); General QM: APR must stay below the average prime offer rate plus this (first-lien loans of $137,958 or more) (2026 threshold)
- [CFPB](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/) — Longest term allowed on a Qualified Mortgage (Jan 7, 2025)
- [12 CFR 1026.43(g)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43) — Prepayment penalty may not apply after this many years (qualified mortgages) (Oct 28, 2026)
- [CFPB: What is a Qualified Mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-mortgage-en-1789/)
- [eCFR: 12 CFR 1026.43 (ability to repay and qualified mortgages)](https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-E/section-1026.43)

_General information, not financial advice._