Qualified mortgage (QM)
A mortgage that meets the underwriting standards set by the Consumer Financial Protection Bureau — including limits on DTI, fees, and loan features. Fannie Mae and Freddie Mac only purchase qualified mortgages, which is why lenders who want to sell loans on the secondary market must follow QM rules. Non-QM loans fall outside these standards, giving lenders flexibility to use alternative qualification methods — at the cost of holding more risk. What is a non-QM loan? →