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30 Year Construction to Permanent Loan

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Question: 
If you are doing a 30 year construction to permanent loan with a 1 year construction period, does it or does it not qualify as a Qualified Mortgage if it meets all other criteria?
Answer: 

Under Comment 43(a)(3)-2, the construction phase of up to 12 months in a construction/permanent combination loan is exempt from the ability-to-repay requirements of section 1026.43, and the two phases of the loan -- construction and permanent -- can be considered separately for ATR and QM qualification.

So if the permanent phase of the loan agreement meets the QM requirements standing by itself, the construction phase won't disqualify it, as long as it's set up for no more than 12 months under the agreement.

First published on 08/22/2015

Last updated on Aug 24 2015

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