Your question obviously pertains to price-based General QMs. If you want to make a QM loan under the price-based General QM definition, you must calculate the APR to determine whether the loan satisfies the price-based General QM definition.
Let me explain. The priced-based General QM definition contains a special rule for calculating the APR for loans where the interest rate may or will change within the first five years after the date on which the first regular periodic payment will be due. These loans are sometimes referred to as short-reset ARMs and step-rate loans.
For loans with this characteristic, the creditor must treat the maximum interest rate that may apply during those five years as the interest rate for the loan's full term when determining the APR for purposes of the price-based QM definition.
This special rule also applies for the purpose of determining whether the loan receives a conclusive or a rebuttable presumption of compliance with the ability-to-repay (ATR) requirement.
For a loan to satisfy the price-based General QM definition, the loan APR cannot exceed the average prime offer rate (APOR) for a comparable transaction by the amounts set forth in the rule as of the date the interest rate is set.
The difference between the loan’s APR and APOR – the “rate spread” – is also used to determine whether the loan will receive a conclusive or rebuttable presumption of compliance with the ATR requirement.
