QM points and fees
Qualified Mortgage (QM)
The Consumer Financial Protection Bureau (CFPB) created the Qualified Mortgage (QM) rule as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act to ensure that lenders can assess a borrower's ability to repay their mortgage loan, and to protect borrowers from paying excessive points and fees.
To achieve QM status, the points and fees associated with the mortgage loan generally need to be less than or equal to 3% of the loan amount (higher percentage thresholds are permitted for loan amounts that are below certain dollar values established by the CFPB). The QM rule offers guidance on how to calculate the total points and fees for this purpose, including when to add MI premiums to the total.
Learn more about QM loans at consumerfinance.gov/rules-policy/.
QM points and fees calculation
The following tables illustrate the impact of MGIC MI rate programs on QM points and fees calculation.
Borrower-paid rate programs
| Include | Do not include | |
| Monthly premium | X | |
| Single premium – Refundable1 | X | |
| Single premium – Non-refundable | X | |
| Annual premium | X | |
| Split premium – Upfront | X | |
| Split premium – Monthly2 | X |
Lender-paid rate programs
| Include | Do not include | |
| Single premium | X | |
| Monthly premium | X | |
| 1 We base our refund schedule on a pro rata 5-year term. To date, QM regulation does not define pro rata. However, based on statements made by CFPB officials and because our refund schedule is based on only a 5-year term, we believe our refundable single premiums should be included in the QM points and fees calculation. 2 Include any monthly split premiums required to be paid into escrow at closing. Do not include monthly premium payable after closing. | ||