A loan cannot be considered a qualified mortgage if what percentage of points and fees exceeds 3%?

A loan cannot be considered a qualified mortgage if the points and fees exceed 3% for loans above $100,000. This threshold is significant because the Qualified Mortgage (QM) rule was established to ensure borrowers are protected from high-cost loans that can lead to financial difficulties.

For loans above $100,000, the Consumer Financial Protection Bureau (CFPB) stipulates that the total points and fees must not exceed 3% of the total loan amount. This limit is designed to provide a safeguard against excessive fees that could be charged by lenders, thereby promoting responsible lending practices. Exceeding this cap could indicate a loan that may not meet the responsible borrower standards set forth by the QM rule.

In contrast, loans at or below the specified threshold of $100,000 have different points and fees allowances, which reflect the expectation that there may be different dynamics in smaller loans, thus offering flexibility within that range. This differentiation is important for protecting both lenders and borrowers in various loan segments.