What is the maximum overall debt limit when calculating the Qualified Mortgage?

The maximum overall debt limit for calculating a Qualified Mortgage is 43% of Gross Verified Income. This threshold is established as part of the Ability-to-Repay rule, which aims to ensure that borrowers do not take on more debt than they can reasonably afford. The 43% limit is designed to strike a balance between allowing borrowers access to credit while also protecting lenders and the housing market from the risks posed by high debt-to-income ratios.

This 43% cap applies to the borrower's total monthly debts, including the proposed mortgage payment as well as other debts such as car loans, student loans, and credit card payments. By adhering to this guideline, lenders can assess a borrower's financial picture more accurately and ensure that they can manage their repayments effectively. It's an important factor that helps to promote responsible lending and borrowing practices in the mortgage industry.