Loan Features Loan Features Balloon Payment FeaturesBalloon Payment Features UnderwritingUnderwriting PortfolioPortfolioPoints and FeesPoints and Fees
Type of Compliance Presumption:
Higher-Priced Loan
Type of Compliance Presumption:
Higher-Priced Loan
Did you and your affiliates who
are creditors that extended
covered transactions during the
last calendar year have:
Assets below $2 billion (as annuall
adjusted) at the end of the last
calendar year?
[§ 1026.43(e)(5)(i)(D), (e)(6)(i)(B),
(f)(1)(vi)(C)]
y
AND
NO
Not Eligible to originate Balloon-Payment QMs
and/or Small Creditor QMs
Eligible to originate General QMs, loans that
become Seasoned QMs (for applications received
on or after March 1, 2021) and/or Temporary GSE
QMs (for applications received prior to expiration)
Did you and your affiliates:
Extend 2,000 or fewer first-lien, closed-
end residential mortgages that are
subject to ATR requirements in the last
calendar year? You can exclude loans
that you originated and kept in portfolio
or that your affiliate originated and kept
in portfolio.
[§ 1026.43(e)(5)(i)(D), (e)(6)(i)(B),
(f)(1)(vi)(B)]
NO
Does the loan have ANY of the
following characteristics?:
(1) negative amortization;
OR
(2) interest-only features;
OR
(3) a loan term of more than 30 years.
[§ 1026.43(e)(2)(i)-(ii), (e)(5)(i)(A),
(f)(1)(i)]
NO
STOP
= Non-QM
Balloon-Payment QM Special Features:
Does the loan have ALL of the following
characteristics?:**
(1) loan term of 5 years or longer?
[§ 1026.43(f)(1)(iv)(C)];
AND
(2) an interest rate that does not increase?
[§ 1026.43(f)(1)(iv)(B)];
AND
(3) substantially equal payments calculated
using an amortization period of 30 years or
less? [§1026.43(f)(1)(iv)(A)];
AND
(4) per your determination, the consumer is
able to make the scheduled periodic
payments (including mortgage-related
obligations) other than the balloon
payment?
[§ 1026.43(f)(1)(ii)]
NO
STOP
= Non-QM
Did you do ALL of the following?:
(1) Consider and verify the consumer’s
debt obligations and income or assets?
[via § 1026.43(c)(7), (e)(2)(v)];
AND
(2) Calculate the consumer’s monthly
payment on the loan?
[via § 1026.43(e)(2)(iv) (Small Creditor
QMs);
(f)(iv)(A) (Balloon-Payment QMs)];
AND
(3) Consider the consumer’s monthly
debt-to-income ratio (DTI) or residual
income (RI)?
[via § 1026.43(c)(7), (e)(2)(vi) (Small
Creditor QMs), (f)(iv)(A) (Balloon-
Payment QMs)]
[§ 1026.43(e)(5)(B), (f)(1)(iii)]
YES
NO
Does the loan amount fall within the following
points-and-fees limits?
Points-and-fees caps (adjusted annually)
If Loan Amount ≥ $100,000, then = 3% of total
If $100,000 > Loan Amount ≥ $60,000, then = $3,000
If $60,000 > Loan Amount ≥ $20,000, then = 5% of total
If $20,000 > Loan Amount ≥ $12,500, then = $1,000
If Loan Amount < $12,500, then = 8% of total
[§ 1026.43(e)(2)(iii), (e)(3), (e)(5)(i)(A), (f)(1)(i)]
YES
NO
STOP
= Non-QM
At the time of consummation:
Was the loan subject to forward
commitment?
[§ 1026.43(e)(5)(i)(C), (f)(1)(v)]
YES
The loan is a Small Creditor
QM or a Balloon-Payment QM.
Is it a "higher-priced" loan for
QM purposes?
A Small Creditor or Balloon-
Payment QM is higher-priced if
the APR, when the interest rate
is set, exceeds the APOR by 3.5
percentage points or more.
[§ 1026.43(b)(4)]
NO
Was at least one of your
organization's first-lien covered
transactions in the prior year
secured by a property in a rural or
underserved area?
[§§ 1026.43(e)(6), (f)(1)(vi),
35(b)(2)(iii)(A)]
If the loan was transferred after
consummation, was it either:
(1) Sold more than three years after
consummation?
(2) Sold—at any time—pursuant to a
supervisory action or agreement?
(3) Transferred—at any time—as part of a
merger or acquisition of or by the creditor? or
(4) Sold—at any time—to another creditor who
meets the criteria for:
(a) [Small Creditor QM] Number of originations
(< 2,000) and asset size (below $2B)?
(b) [Balloon-Payment QM] Number of
originations (< 2,000), asset size (below $2B),
and operating in rural or underserved
communities (at least one of the organization’s
first-lien covered transactions in the prior
calendar year was secured by a property in a
"Rural" OR "Underserved" area)?
[§ 1026.43(e)(5)(ii), (f)(2)]
YES
NO
YES
YES
Does the loan include a
balloon payment?
Potential Small
Creditor QM
STOP
= Non-Small Creditor QM
= Non-Balloon-Payment QM
Rebuttable Presumption
Applies
(QM is presumed to comply
with ATR requirements if
it’s a higher-priced loan, but
consumers can rebut the
presumption by showing
insufficient residual income
based on information
available at the time of
consummation)
[§ 1026.43(e)(1)(ii)]
Safe Harbor Applies
(QM is conclusively
presumed to comply with
ATR requirements when it
is not a higher-priced loan)
[§ 1026.43(e)(1)(i)]
YES
NO
YES
Potential Balloon-
Payment QM
Is the loan still held by the
originating creditor?
NO
NO
YES
STOP
= Non-Small Creditor QM
= Non-Balloon-Payment QM
STOP
= Non-Small Creditor QM
= Non-Balloon-Payment QM
Did you and your affiliates:
Extend 2,000 or fewer first-lien closed-
end residential mortgages that are subject
to ATR requirements in either of the
immediately preceding calendar years?
You can exclude loan that you originated
and kept in portfolio or that your affiliate
originated and kept in portfolio.
[§ 1026.43(e)(5)(i)(D), (e)(6)(i)(B),
(f)(1)(vi)(B)]
Did you and your affiliates who are
creditors that extended covered
transactions during the applicable
calendar year have:
Assets below $2 billion (as annually
adjusted) at the end of either of the two
immediately preceding calendar years
[§ 1026.43(e)(5)(i)(D), (e)(6)(i)(B),
(f)(1)(vi)(C)]
Did you receive the
application before April 1
st
of the current year?
NO
NO YES
NO
YES
AND
YES
YES
NO
v2.0, 2/2021 | 1
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Small Creditor Qualified Mortgages
Reflects rules in effect on March 1, 2021 but does not reflect amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act.
Small Creditor Qualified Mortgages
Reflects rules in effect on March 1, 2021 but does not reflect amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act.
Loan Features Loan Features Small Creditor QualificationSmall Creditor Qualification Balloon Payment FeaturesBalloon Payment Features UnderwritingUnderwriting PortfolioPortfolioPoints and FeesPoints and Fees
Type of Compliance Presumption:
Higher-Priced Loan
Type of Compliance Presumption:
Higher-Priced Loan
Did you and your affiliates who
are creditors that extended
covered transactions during the
last calendar year have:
Assets below $2 billion (as annually
adjusted) at the end of the last
calendar year?
[§ 1026.43(e)(5)(i)(D), (e)(6)(i)(B),
(f)(1)(vi)(C)]
AND
NO
Not Eligible to originate Balloon-Payment QMs
and/or Small Creditor QMs
Eligible to originate General QMs, loans that
become Seasoned QMs (for applications received
on or after March 1, 2021) and/or Temporary GSE
QMs (for applications received prior to expiration)
Did you and your affiliates:
Extend 2,000 or fewer first-lien, closed-
end residential mortgages that are
subject to ATR requirements in the last
calendar year? You can exclude loans
that you originated and kept in portfolio
or that your affiliate originated and kept
in portfolio.
[§ 1026.43(e)(5)(i)(D), (e)(6)(i)(B),
(f)(1)(vi)(B)]
NO
Does the loan have ANY of the
following characteristics?:
(1) negative amortization;
OR
(2) interest-only features;
OR
(3) a loan term of more than 30 years.
[§ 1026.43(e)(2)(i)-(ii), (e)(5)(i)(A),
(f)(1)(i)]
NO
STOP
= Non-QM
Balloon-Payment QM Special Features:
Does the loan have ALL of the following
characteristics?:**
(1) loan term of 5 years or longer?
[§ 1026.43(f)(1)(iv)(C)];
AND
(2) an interest rate that does not increase?
[§ 1026.43(f)(1)(iv)(B)];
AND
(3) substantially equal payments calculated
using an amortization period of 30 years or
less? [§1026.43(f)(1)(iv)(A)];
AND
(4) per your determination, the consumer is
able to make the scheduled periodic
payments (including mortgage-related
obligations) other than the balloon
payment?
[§ 1026.43(f)(1)(ii)]
NO
STOP
= Non-QM
Did you do ALL of the following?:
(1) Consider and verify the consumer’s
debt obligations and income or assets?
[via § 1026.43(c)(7), (e)(2)(v)];
AND
(2) Calculate the consumer’s monthly
payment on the loan?
[via § 1026.43(e)(2)(iv) (Small Creditor
QMs);
(f)(iv)(A) (Balloon-Payment QMs)];
AND
(3) Consider the consumer’s monthly
debt-to-income ratio (DTI) or residual
income (RI)?
[via § 1026.43(c)(7), (e)(2)(vi) (Small
Creditor QMs), (f)(iv)(A) (Balloon-
Payment QMs)]
[§ 1026.43(e)(5)(B), (f)(1)(iii)]
YES
NO
Does the loan amount fall within the following
points-and-fees limits?
Points-and-fees caps (adjusted annually)
If Loan Amount ≥ $100,000, then = 3% of total
If $100,000 > Loan Amount ≥ $60,000, then = $3,000
If $60,000 > Loan Amount ≥ $20,000, then = 5% of total
If $20,000 > Loan Amount ≥ $12,500, then = $1,000
If Loan Amount < $12,500, then = 8% of total
[§ 1026.43(e)(2)(iii), (e)(3), (e)(5)(i)(A), (f)(1)(i)]
YES
NO
STOP
= Non-QM
At the time of consummation:
Was the loan subject to forward
commitment?
[§ 1026.43(e)(5)(i)(C), (f)(1)(v)]
YES
The loan is a Small Creditor
QM or a Balloon-Payment QM.
Is it a "higher-priced" loan for
QM purposes?
A Small Creditor or Balloon-
Payment QM is higher-priced if
the APR, when the interest rate
is set, exceeds the APOR by 3.5
percentage points or more.
[§ 1026.43(b)(4)]
NO
Was at least one of your
organization's first-lien covered
transactions in the prior year
secured by a property in a rural or
underserved area?
[§§ 1026.43(e)(6), (f)(1)(vi),
35(b)(2)(iii)(A)]
If the loan was transferred after
consummation, was it either:
(1) Sold more than three years after
consummation?
(2) Sold—at any time—pursuant to a
supervisory action or agreement?
(3) Transferred—at any time—as part of a
merger or acquisition of or by the creditor? or
(4) Sold—at any time—to another creditor who
meets the criteria for:
(a) [Small Creditor QM] Number of originations
(< 2,000) and asset size (below $2B)?
(b) [Balloon-Payment QM] Number of
originations (< 2,000), asset size (below $2B),
and operating in rural or underserved
communities (at least one of the organization’s
first-lien covered transactions in the prior
calendar year was secured by a property in a
"Rural" OR "Underserved" area)?
[§ 1026.43(e)(5)(ii), (f)(2)]
YES
NO
YES
YES
Does the loan include a
balloon payment?
Potential Small
Creditor QM
STOP
= Non-Small Creditor QM
= Non-Balloon-Payment QM
Rebuttable Presumption
Applies
(QM is presumed to comply
with ATR requirements if
it’s a higher-priced loan, but
consumers can rebut the
presumption by showing
insufficient residual income
based on information
available at the time of
consummation)
[§ 1026.43(e)(1)(ii)]
Safe Harbor Applies
(QM is conclusively
presumed to comply with
ATR requirements when it
is not a higher-priced loan)
[§ 1026.43(e)(1)(i)]
YES
NO
YES
Potential Balloon-
Payment QM
Is the loan still held by the
originating creditor?
NO
NO
YES
STOP
= Non-Small Creditor QM
= Non-Balloon-Payment QM
STOP
= Non-Small Creditor QM
= Non-Balloon-Payment QM
Did you and your affiliates:
Extend 2,000 or fewer first-lien closed-
end residential mortgages that are subject
to ATR requirements in either of the
immediately preceding calendar years?
You can exclude loan that you originated
and kept in portfolio or that your affiliate
originated and kept in portfolio.
[§ 1026.43(e)(5)(i)(D), (e)(6)(i)(B),
(f)(1)(vi)(B)]
Did you and your affiliates who are
creditors that extended covered
transactions during the applicable
calendar year have:
Assets below $2 billion (as annually
adjusted) at the end of either of the two
immediately preceding calendar years
[§ 1026.43(e)(5)(i)(D), (e)(6)(i)(B),
(f)(1)(vi)(C)]
Did you receive the
application before April 1
st
of the current year?
NO
NO YES
NO
YES
AND
YES
YES
NO
v2.0, 2/2021
| 2
