Qualified Residential Mortgage Could Set Bar at 43% DTI Ratio

According to Bloomberg, two people familiar with the new rule (who asked to remain anonymous) have said the “line” will be drawn at 43% debt-to-income ratio. This means the borrower’s back-end or total DTI must not exceed 43%, if the home loan is to be considered a Qualified Residential Mortgage.

That number should have a familiar ring to industry professionals. Previous rules have also set the DTI bar at 43%. It seems that federal financial regulators aren’t comfortable with debt-to-income ratios above 43%.

The QRM rule has been a long time coming. It was first proposed early in 2011, but has yet to be finalized or implemented. Earlier proposals included a 20% down-payment requirement and a maximum debt-to-income ratio of 36%. But those proposals drew criticism from a variety of groups, ranging from the National Association…