8 Basic Requirements of the Ability to Repay Mortgage Rule

Ability to Repay Basic Eight Requirements

2014 brings with it many new rules established by this new regulator that have significant impacts not only on the type of loans that consumers have access to but how they are delivered. The rule set minimum requirements that a creditor must consider in making the ability‐to‐repay determination. Eight factors must be considered, at a minimum, in the underwriting evaluation process:


The mission of CFPB is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products. – CFPB.org

Qualified Mortgage - Ability to Pay Rule

Ability to Repay Basic Eight Requirements

2014 brings with it many new rules established by this new regulator that have significant impacts not only on the type of loans that consumers have access to but how they are delivered. The rule set minimum requirements that a creditor must consider in making the ability‐to‐repay determination. Eight factors must be considered, at a minimum, in the underwriting evaluation process:

  1. Current and reasonably expected income or assets
  2. Current employment status (if you rely on employment income)
  3. The consumer’s monthly payment on the loan. This is calculated using the introductory or fully‐indexed rate, whichever is higher, and monthly, fully‐amortizing payments that are substantially equal.
  4. Monthly payment on any simultaneous loans secured by the same property
  5. Monthly payments for property taxes and insurance & other costs related to the property such as home owner’s association fees or ground rent.
  6. Debts, alimony, and child‐support obligations
  7. Monthly debt‐to‐income ratio (DTI) or residual income, that the creditor calculates using the total of obligations listed above, as a ratio of gross monthly income
  8. Credit history

In addition, residual income and/or assets, or other underwriting conditions, may be required depending on the individual loan.  Residual income requirements will be published separately. Because of these new rules now more than ever is it important to get Prequalified for your mortgage before you put any money at risk by writing a contract for a home that you are not certain if you can obtain a mortgage loan of rit.

Click here for  a Free Pre Qualification and credit review
Click here for a Free Pre Qualification and credit review

Ricardo Cobos is a licensed mortgage loan officer in Raleigh-Cary-Durham North Carolina who has been helping families to achieve financial security through responsible home-ownership since 1998. (919) 526-0183

This article was written by ricardocobos

Since relocating from Northern Michigan in 2007 I have lived in Garner (27529) with my wife Melanie and our four children. With personal production of 8MM in real estate sales across Southern Wake County I am considered to be a local market expert in the following communities: Garner (27529), Fuquay-Varina (27526), Holly-Springs (27540), Apex (27502), and Raleigh (27603, 27604, 27606, 27609, 27610)) which spans from downtown Raleigh to Willow Spring including Lake Wheeler. Call or email me, I’m here to help! Ricardo Cobos (919) 526-0183

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