12 CFR §1026.43 — Minimum standards for transactions secured by a dwelling (ATR/QM)
Regulation Z §1026.43 implements the Ability-to-Repay/Qualified Mortgage rule: scope, general ATR rule, eight ATR factors, third-party verification of income and assets, refinancing of non-standard mortgages, the QM categories (general, agency, small-creditor portfolio, balloon-payment, seasoned), and the QM points-and-fees cap.
Verbatim regulatory text
Verbatim provisions from 12 CFR §1026.43 — Minimum standards for transactions secured by a dwelling (ATR/QM) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
12 CFR §1026.43(a) — Scope of ATR/QM rule (covered transactions)
(a) Scope. This section applies to any consumer credit transaction that is secured by a dwelling , as defined in § 1026.2(a)(19) , including any real property attached to a dwelling , other than:
12 CFR §1026.43(c)(1) — General ATR rule: reasonable and good-faith determination
(c) Repayment ability —(1) General requirement. A creditor shall not make a loan that is a covered transaction unless the creditor makes a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms.
12 CFR §1026.43(c)(2) — Eight ATR consideration factors
(2) Basis for determination. Except as provided otherwise in paragraphs (d), (e), and (f) of this section, in making the repayment ability determination required under paragraph (c)(1) of this section, a creditor must consider the following:
12 CFR §1026.43(c)(4) — Verification of income or assets via third-party records
(4) Verification of income or assets. A creditor must verify the amounts of income or assets that the creditor relies on under § 1026.43(c)(2)(i) to determine a consumer 's ability to repay a covered transaction using third-party records that provide reasonably reliable evidence of the consumer 's income or assets.
12 CFR §1026.43(d) — Refinancing of non-standard mortgages into standard mortgages (ATR exemption)
(3) Exemption from repayment ability requirements. A creditor is not required to comply with the requirements of paragraph (c) of this section if:
12 CFR §1026.43(e)(2) — General QM definition
(2) Qualified mortgage defined—general. Except as provided in paragraph (e)(4), (5), (6), (7), or (f) of this section, a qualified mortgage is a covered transaction:
12 CFR §1026.43(e)(3) — Limits on points and fees for QM
(i) Except as provided in paragraph (e)(3)(iii) of this section, a covered transaction is not a qualified mortgage unless the transaction's total points and fees, as defined in § 1026.32(b)(1), do not exceed:
12 CFR §1026.43(e)(7) — Seasoned QM
(7) Qualified mortgage defined—seasoned loans —(i) General. Notwithstanding paragraph (e)(2) of this section, and except as provided in paragraph (e)(7)(iv) of this section, a qualified mortgage is a first-lien covered transaction that:
12 CFR §1026.43(a) — Scope of ATR/QM rule (covered transactions) — enumerated items (chapeau recall fix)
(1) A home equity line of credit subject to § 1026.40 ; (2) A mortgage transaction secured by a consumer 's interest in a timeshare plan, as defined in 11 U.S.C. 101 (53(D)); or (3) For purposes of paragraphs
12 CFR §1026.43(c)(2) — Eight ATR consideration factors — enumerated items (chapeau recall fix)
(i) The consumer 's current or reasonably expected income or assets, other than the value of the dwelling , including any real property attached to the dwelling , that secures the loan; (ii) If the creditor relies on income from the consumer 's employment in determining repayment ability, the consumer 's current employment status; (iii) The consumer 's monthly payment on the covered transaction, calculated in accordance with paragraph (c)(5) of this section; (iv) The consumer 's monthly payment on any simultaneous loan that the creditor knows or has reason to know will be made, calculated in accordance with paragraph (c)(6) of this section; (v) The consumer 's monthly payment for mortgage-related obligations; (vi) The consumer 's current debt obligations, alimony, and child support; (vii) The consumer 's monthly debt -to-income ratio or residual income in accordance with paragraph (c)(7) of this section; and (viii) The consumer 's credit history.
12 CFR §1026.43(d) — Refinancing of non-standard mortgages into standard mortgages (ATR exemption) — enumerated items (chapeau recall fix)
(i) The conditions in paragraph (d)(2) of this section are met; and (ii) The creditor has considered whether the standard mortgage likely will prevent a default by the consumer on the non-standard mortgage once the loan is recast.
12 CFR §1026.43(e)(2) — General QM definition — enumerated items (chapeau recall fix)
(i) That provides for regular periodic payments that are substantially equal, except for the effect that any interest rate change after consummation has on the payment in the case of an adjustable-rate or step-rate mortgage, that do not: (A) Result in an increase of the principal balance; (B) Allow the consumer to defer repayment of principal, except as provided in paragraph (f) of this section; or (C) Result in a balloon payment, as defined in § 1026.18(s)(5)(i) , except as provided in paragraph (f) of this section; (ii) For which the loan term does not exceed 30 years; (iii) For which the total points and fees payable in connection with the loan do not exceed the amounts specified in paragraph (e)(3) of this section; (iv) For which the creditor underwrites the loan, taking into account the monthly payment for mortgage-related obligations, using: (A) The maximum interest rate that may apply during the first five years after the date on which the first regular periodic payment will be due; and (B) Periodic payments of principal and interest that will repay either:
12 CFR §1026.43(e)(2) — General QM definition — enumerated items (chapeau recall fix) — enumerated items (chapeau recall fix)
(1) The outstanding principal balance over the remaining term of the loan as of the date the interest rate adjusts to the maximum interest rate set forth in paragraph (e)(2)(iv)(A) of this section, assuming the consumer will have made all required payments as due prior to that date; or (2) The loan amount over the loan term;