What is defined as a "qualified mortgage" under federal law?

A "qualified mortgage" under federal law is defined as a fully amortizing mortgage where the points and fees do not exceed 3% of the total loan amount. This definition is part of the regulations set forth to ensure that borrowers are not subjected to excessive fees and that the loans they are obtaining are structured in a way that they can reasonably repay, contributing to overall financial stability.

The criteria for a qualified mortgage include a maximum loan term of 30 years, maintaining a fixed payment structure that provides borrowers with predictable payment amounts, and limits on fees and points to minimize the upfront costs associated with obtaining a loan. These measures are designed to protect consumers and to promote responsible lending practices.

The other options present characteristics that do not align with the definition of a qualified mortgage. For instance, a mortgage with a term exceeding 30 years and high fees would not meet the criteria, nor would a mortgage allowing for interest-only payments, as both of these scenarios could potentially lead to greater financial risk for borrowers. Furthermore, a mortgage financed through government funding does not inherently qualify as a qualified mortgage unless it adheres to the specific terms set by federal regulations.