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.
Key facts
2.25%
General QM price limit over the average prime offer rate
CFPB, Federal Register 90 FR 57890 · 2026 threshold
What a QM can’t have
- Interest-only payments, negative amortization or, except for some small lenders, a 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 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.
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
Sources
- CFPB, Federal Register 90 FR 57890 — 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 — Longest term allowed on a Qualified Mortgage (Jan 7, 2025)
- 12 CFR 1026.43(g) — Prepayment penalty may not apply after this many years (qualified mortgages) (Oct 28, 2026)
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.