Do All Lenders Have to Make Qualified Mortgages?

Do all lenders have to make Qualified Mortgages? No — and that answer surprises a lot of home loan shoppers who were told a lender “couldn’t” lend to them because of fee limits. This article explains the qualified mortgage definition, what a non-QM loan is, and what the rules actually require, for Colorado buyers and anyone sorting through conflicting answers online.

The direct answer: QM loans are optional for lenders

Under the Consumer Financial Protection Bureau’s mortgage rules, lenders are required to do two things: document and determine your ability to repay the loan. That is the ability-to-repay rule.

Making only Qualified Mortgages is one way a lender can choose to comply with that rule — but it is a choice, not a mandate. Lenders that make non-qualified mortgage loans can charge higher points and fees than a QM loan allows.

So if a lender tells you a points-and-fees limit blocks your loan everywhere, that is not accurate. It blocks that loan from being a QM at that lender. Next, the definition.

Qualified mortgage definition: what makes a loan a QM

A Qualified Mortgage is a loan with less risky features and protections that make it more likely you’ll be able to afford the loan. If a loan is a QM, it is assumed the lender followed the ability-to-repay rule.

No risky features

Qualified mortgages exclude interest-only payments, where you pay interest without reducing principal. They also exclude negative amortization, where the balance can grow even while you make payments.

Balloon payments — larger-than-usual payments at the end of the loan term — are generally excluded too, though they are allowed under certain conditions for loans made by small lenders. Loan terms longer than the standard maximum length are also out.

Verification of income, assets, and debt

For a QM loan, the lender must consider and verify your current monthly income or assets and your monthly debt. The lender then looks at either your debt-to-income ratio or your residual income — what’s left after monthly debts are paid.

Limits on price and fees

Qualified mortgages carry a cap on the annual percentage rate relative to a threshold that depends on the loan’s type and size, with exceptions for seasoned and small-creditor QMs. Upfront points and fees are also capped, with the limit scaling to the loan size; not every charge counts toward it. If the fees exceed the threshold, the loan simply can’t be a QM — which is where non-QM lending comes in.

What is a non-QM loan?

A non-QM loan is any mortgage loan that doesn’t meet the Qualified Mortgage criteria. Because lenders are not required to make qualified mortgages, non-QM loans are legal — the lender still must make a good-faith determination that the borrower can repay.

The only thing the rules actually stop is lending to a borrower who does not have the ability to repay the loan.

Feature	QM loan	Non-QM loan
Ability-to-repay rule	Applies; compliance is assumed	Applies
Points and fees cap	Yes, scaled to loan size	No cap required
Interest-only or negative amortization	Not allowed	Possible

Who this applies to in Colorado

Government-backed loans guaranteed or insured by HUD/the Federal Housing Administration, the U.S. Department of Agriculture, and the Department of Veterans Affairs are types of qualified loans. That matters in Colorado Springs, where VA borrowers around Fort Carson, Peterson, and the Air Force Academy make up a big share of the market — you can explore VA loan options here.

Conventional loans backed by Fannie Mae and Freddie Mac, and jumbo loans, must meet special requirements to be considered qualified loans. Borrowers who don’t fit a traditional mortgage box may still find a path through non-QM lending — the rules allow it.

What the official source says

The Consumer Financial Protection Bureau states plainly: “Lenders are not required to make Qualified Mortgages, so they can charge higher points and fees if they choose.” You can read the CFPB’s answers on what a Qualified Mortgage is and points-and-fees limits directly.

What to do next

If one lender declined you citing QM fee caps, that is a reason to ask more questions, not to stop shopping. Gather your income documentation, debt details, and credit history, then compare how different lenders would structure the loan.

Talk with a 719 Lending loan officer in Colorado Springs about whether a QM or non-QM structure fits your situation — including if a PCS move has your income or timeline in flux.

Frequently asked questions

Do all lenders have to make Qualified Mortgages?

No. Lenders must document and determine a borrower’s ability to repay, but making only Qualified Mortgages is a compliance choice. Lenders that make non-QM loans can charge points and fees above the QM caps.

Can a lender refuse my loan because of points-and-fees limits?

The CFPB says the rules only stop a loan when the borrower lacks the ability to repay. Fee caps apply only to Qualified Mortgages, so a loan exceeding them can’t be a QM — but another lender may structure it as a non-QM loan.

Is a VA or FHA loan a Qualified Mortgage?

Yes. Government-backed loans guaranteed or insured by HUD/FHA, USDA, and the Department of Veterans Affairs are types of qualified loans under the CFPB’s definition.

Do non-QM loans skip the ability-to-repay rule?

No. Every lender must make a good-faith effort to determine you can repay the mortgage. A non-QM loan just doesn’t carry the QM presumption that the rule was followed.

What features disqualify a loan from being a QM?

Interest-only periods, negative amortization, loan terms longer than the standard maximum, and generally balloon payments — though balloon payments are allowed under certain conditions for small lenders.

719 Lending Inc., NMLS #1601989 · Equal Housing Opportunity

719 Lending Inc. is not affiliated with or endorsed by HUD, FHA, VA, USDA, CHFA, the CFPB, or any government agency.

Last updated: October 2026