Originally Posted By Skittles
Yes you can (as far as I have learned); however they cannot be Higher Priced Covered Transactions. If you have an HPCT then you must qualify the borrower on the balloon payment.
I'm not so certain that's correct. If you are qualified on all three criteria, your ability to write balloon-payment QMs under 1026.43(f) would not be affected at all, and under (f)(1)(ii) and (iii) you'd be able to ignore the balloon payment in qualifying the borrower. If you don't qualify under the "rural and underserved" criterion but do meet the other two criteria, you'' no longer be able to make balloon-loan QMs at all. But you will be able to make QMs under the general ATR requirements, in which case. Skittles comment is correct.