A lender designs a product with a 35-year term, full amortization, fixed rate, no balloon and points and fees of 2%. It asks whether the loan can be a qualified mortgage. Does the loan's term allow it to qualify as a General Qualified Mortgage?
Correct Answer
C) No: the term of a qualified mortgage may not run beyond 30 years
C. A 35-year term exceeds the General QM maximum of 30 years. The term limit is an independent condition under section 1026.43(e)(2)(ii). Full amortization, a fixed rate and low fees cannot compensate for failing that condition. Scope and exceptions: Failing General QM status does not by itself establish that making the loan is unlawful. Applicable ability-to-repay requirements still matter. Nor does a term of 30 years alone establish compliance with the other QM conditions. Source: Section 1026.43(c), (e)(2)(i)–(iii) — https://www.consumerfinance.gov/rules-policy/regulations/1026/43/
Why This Is the Correct Answer
C. A 35-year term exceeds the General QM maximum of 30 years. The term limit is an independent condition under section 1026.43(e)(2)(ii). Full amortization, a fixed rate and low fees cannot compensate for failing that condition. Scope and exceptions: Failing General QM status does not by itself establish that making the loan is unlawful. Applicable ability-to-repay requirements still matter. Nor does a term of 30 years alone establish compliance with the other QM conditions.
Why the Other Options Are Wrong
Option A: Yes: 35 years is permitted where points and fees stay under 3%
A points-and-fees limit does not extend the permitted term.
Option B: No: full amortization is itself disqualifying under the QM definition
Full amortization is not the disqualifying feature.
Option D: Yes: term is unrestricted where the loan fully amortizes each month
Full amortization does not remove the term ceiling.
Exam Tip
Test each QM condition separately; one favorable feature cannot offset a failed limit.
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