A qualified mortgage is one that meets all of the following standards, except

• A. An LTV ratio of 65% or less
• B. A debt-to-income ratio at or below 43%
• C. No excessive upfront points and fees
• D. Fully amortizing loan with no negative amortization

Answer: (A)

Qualified Mortgage status is defined by features that protect borrowers from risky repayment terms. A loan must be fully amortizing with no negative amortization, it must not have excessive upfront points and fees (typically capped at 3% of the loan amount), and the borrower’s debt-to-income ratio should be 43% or less (with some small- creditor exceptions). These criteria focus on the borrower’s ability to repay and the loan’s payment structure.

The statement about a specific loan-to-value cap—requiring an LTV of 65% or less—is not part of the standard QM criteria. There isn’t a universal LTV requirement in the QM definition, so that particular constraint doesn’t belong with the other QM features. That’s why it’s the exception.