Documents and Consumer Protections
Ability-to-Repay
Short answer
For covered transactions, the creditor generally must make a reasonable, good-faith determination that the consumer can repay the loan.
Detailed explanation
For covered transactions, the creditor generally must make a reasonable, good-faith determination that the consumer can repay the loan.
The determination uses applicable financial factors and information verified through reasonably reliable records. Requirements and exceptions vary by transaction.
What this means for you
Expect the creditor to evaluate applicable verified financial information. Alternative-documentation or Non-QM does not mean that repayment ability is ignored.
Important limitations and exceptions
- Availability, eligibility, pricing, documentation, and state coverage vary. This article is general education and is not an approval, rate quote, Loan Estimate, commitment to lend, or recommendation for a specific consumer.
Primary references
Educational-information disclaimer
This article provides general mortgage education. It is not legal, tax, investment, or financial-planning advice; an approval or credit decision; a commitment to lend; a rate lock; a Loan Estimate; or a recommendation for your specific circumstances. Consult the appropriate licensed or independent professional for transaction-specific guidance.