What is the maximum loan term allowed under the QM Rule?

The maximum loan term allowed under the Qualified Mortgage (QM) Rule is 30 years. This regulation was established by the Consumer Financial Protection Bureau (CFPB) to create standards for certain mortgage products and protect consumers from risky lending practices. The QM Rule aims to ensure that borrowers have a reasonable ability to repay their loans and establishes guidelines to prevent mortgage products that can lead to default or foreclosure.

A 30-year term provides a long repayment period, making monthly payments more affordable for borrowers compared to shorter terms. It also allows for a fixed interest rate option, which can offer stability and predictability in monthly payments. Given the importance of ensuring borrowers can manage their debt comfortably, the 30-year limit aligns with responsible lending practices and helps to mitigate risks in the mortgage market.

While other choices, such as 20 years, 25 years, or 35 years, may reflect different loan terms that some lenders offer, they do not comply with the QM Rule's maximum allowable limit, which is firmly set at 30 years.