A borrower's loan application shows a debt-to-income ratio of 45%. What additional documentation requirement applies under the Ability-to-Repay rule?
Correct Answer
C) Documentation that the borrower can repay the loan despite the high DTI
Under the Ability-to-Repay rule (12 CFR 1026.43), when DTI exceeds 43% for non-QM loans, lenders must document and verify the borrower's ability to repay the loan, considering all relevant factors beyond just the DTI ratio.
Why This Is the Correct Answer
Under the Ability-to-Repay rule (12 CFR 1026.43), when DTI exceeds 43% for non-QM loans, lenders must document and verify the borrower's ability to repay the loan, considering all relevant factors beyond just the DTI ratio.
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