QM pricing test on a conventional loan: how LLPAs push a 620 score toward the APOR line
A conforming loan is a Qualified Mortgage when its APR stays within 2.25 points of APOR and points and fees under 3%; DU and LPA approval no longer makes a loan QM by itself, and heavy LLPAs can erode the safe harbor.
The patch is gone; the price test decides
Until 2021 any loan DU or LPA approved was a Qualified Mortgage under the temporary “GSE patch,” regardless of its DTI or price. The GSEs stopped relying on it for applications received on or after July 1, 2021, and the patch expired outright on October 1, 2022. Today a conforming loan is a General QM if the APR does not exceed the average prime offer rate by more than 2.25 percentage points for a first lien of typical conforming size, the term is 30 years or less, there is no interest-only or balloon feature, points and fees stay within 3% of the loan amount, and the lender considered and verified income, assets and debts. The Fannie Mae Selling Guide and Freddie Mac Guide verification standards are expressly recognized as satisfying the “verify” requirement, which is why the AUS document list looks the way it does.
Where a repeat buyer can drift out of the safe harbor
A QM priced below APOR plus 1.5 points gets a conclusive safe harbor; between 1.5 and 2.25 it is only a rebuttable presumption of compliance and is also a higher-priced mortgage loan, with a mandatory escrow account for at least five years. Loan-level price adjustments are the pressure. A 640 score at 90% LTV on a second home, with a cash-out component, can stack adjustments that lenders recover through the rate, and the APR may land in the rebuttable zone. Ask for the APR-to-APOR spread on your Closing Disclosure date; a lender that buys the rate down with its own credits, or suggests a larger down payment, is often steering the loan back under 1.5 for its own protection as much as yours.
DTI is no longer a QM number, but it is still a GSE number
The old 43% cap was repealed for General QM. Conforming eligibility, however, runs through DU and LPA, which cap back-end DTI at 50% and get tighter above 45% unless reserves, score and LTV compensate. The practical result for a move-up buyer carrying two housing payments for a few months: the loan can be a perfectly valid QM on price and still be ineligible for delivery, which the lender will report as an “Ineligible” finding rather than a denial on ability to repay.
Points, fees and the discount-point exclusion
Up to two bona fide discount points are excluded from the 3% cap when the undiscounted rate is within one point of APOR (one point excluded if within two). Origination fees, broker compensation paid by you and most lender-affiliated charges count. On a conforming loan in the $300,000 to $800,000 range the cap is rarely binding, but it explains why a lender may refuse to let you buy the rate down further than a certain number of points.
What to check
- Ask the lender where your APR sits relative to APOR: under 1.5 points is safe harbor, 1.5 to 2.25 is rebuttable presumption and HPML with a five-year escrow.
- An AUS approval does not make the loan QM anymore; price, term, features and the 3% cap do.
- Expect DU and LPA to cap DTI at 50% even though the QM rule no longer has a DTI limit.
- Bona fide discount points are excluded from points and fees only within the APOR bands — that is why buydown depth may be limited.
Frequently asked questions
Does a DU Approve/Eligible finding mean my loan is a Qualified Mortgage?
Not by itself since the GSE patch ended. The finding confirms eligibility for sale to Fannie Mae and provides a recognized way to verify income and debts, but QM status now depends on the loan’s APR relative to APOR, its term and features, and the points-and-fees cap. Most conforming loans pass, yet a high-LLPA loan can fall into the rebuttable-presumption band.
What changes if my conforming loan turns out to be a higher-priced mortgage loan?
An escrow account for taxes and insurance becomes mandatory for at least five years, a full interior appraisal is required, and the QM protection drops from a safe harbor to a presumption. The loan is still deliverable to the GSEs if DU or LPA approved it. Reducing LTV, improving the score or taking lender credits can pull the APR back under the threshold.
The rule in full: Ability-to-Repay and Qualified Mortgage rule (ATR/QM). The borrower profile: Conventional loan borrowers. Related guides: Conventional loan requirements: credit, down payment, DTI, reserves, property · Conforming loan limits: how the FHFA number works and what happens above it · Debt-to-income ratio limits by loan type — and how to lower yours · How much house can I afford? The math lenders actually use.
Other federal rules for conventional loan borrowers
TILA / Reg Z · RESPA · TRID disclosures · ECOA · Fair Housing Act · HMDA · SAFE Act / NMLS · HOEPA · HPA / PMI · Servicing rules · FCRA · Flood insurance · MARS rule · SCRA · LO compensation
ATR / QM for other borrowers
First-time buyers · Veterans · Self-employed · Investors · Retirees · Bad credit · Foreign nationals · Physicians · Heroes · Rural buyers · Condo & second home · Refinancing