The two QM categories are General and Temporary; what are the other two categories?

The two additional categories of Qualified Mortgages (QM) beyond General and Temporary are indeed Balloon and Small Creditor. Understanding these categories is essential for mortgage loan officers as they relate to the requirements and limitations set forth under the Ability to Repay rule.

Balloon loans feature payments that do not amortize over the life of the loan, but instead, a large final payment is due at maturity. This type of loan can be a QM if it meets certain conditions laid out in the regulations. Meanwhile, the Small Creditor category is designed to support smaller lenders by providing more flexibility with QM underwriting requirements, encouraging them to extend credit to consumers.

The other options listed do not represent QM categories. Cash-Out and Refinance relate to loan types but do not form part of the QM classification structure. Conventional and Government refer to the types of loans rather than QM categories. Hybrid and Fixed, while descriptive of loan structures, do not relate to the QM classification at all. Understanding these distinctions helps in navigating the mortgage lending landscape effectively.