What does the term "Qualified Mortgage" refer to?

The term "Qualified Mortgage" refers to a category of loans that are designed to have less risky features, which helps to protect borrowers from predatory lending practices. This classification is part of the regulations set forth by the Consumer Financial Protection Bureau (CFPB).

Qualified Mortgages are characterized by limits on fees and points, a prohibition on risky features such as negative amortization, and an assurance that the borrower has the ability to repay the loan. These features are intended to make the mortgage market safer for consumers and to ensure that borrowers do not take on loans they cannot afford. By maintaining these standards, Qualified Mortgages contribute to overall financial stability and help prevent issues associated with default and foreclosure.

The other options do not accurately capture the essence of what defines a Qualified Mortgage. High-interest rates, lack of documentation, and restrictions to first-time buyers do not reflect the intended safeguards that the Qualified Mortgage framework aims to promote.