Understanding Qualified Mortgage: What It Is & How To Get One

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A home purchase is a major investment, and likely one of the most substantial financial moves you will make. If you are like most home buyers, you’re planning to get a mortgage to pay. Remember that when securing a mortgage, it will be something you’ll live with for a long period of time so choose wisely!

A safe choice when determining your mortgage is what the Consumer Protection Act calls a Qualified Mortgage. To be considered a Qualified Mortgage, the loan offers certain protections like:

  • It must be for 30 years or less.
  • It cannot offer “interest only” payment periods in which your payments only go toward the interest and not the principal.
  • It cannot use “negative amortization” in which your loan principal is actually increasing even though you’re making payments.
  • It avoids “balloon” payments in which large lump sums are due at scheduled points during the loan period, though exceptions are made for smaller creditors.

Related: Mortgage Lending Do’s & Don’ts for First Time Home Buyers

Here at Fidelity Bank, we want you to be able to repay your mortgage. That is why our Loan Officers will discuss with you a variety of options and explore the programs that fit your unique circumstances best. Some of the factors to consider include your employment status and any assets you own. The second is any debt you may owe, including the cost of the mortgage. These two numbers give us your Debt-to-Income ratio, or DTI. A good target is 43% or less.

Your credit history also plays a role in determining what kind of interest rate you qualify for.

Related: Did Your Credit Score Drop? These Common Mistakes Might Be Why…

When you submit an application to get pre-qualified, this information will be part of determining what is the best mortgage approach for you and your family. Connect with one of our experts to discuss options and get started today.


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