If our internal loan policy states we have a DTI guideline of 40% but we approve a mortgage with a DTI of 45%, does that still qualify for a QM using the small creditor exemption since small creditors are exempt from the 43% DTI limit?
As you stated, there isn’t a DTI ceiling for the small creditor QM option. As long as you consider the DTI and verify the debt and income in accordance with 1026.43(e)(5)(B) then there isn’t a limit on the DTI, which means you could make an exception to your policy. Just remember that exceptions to your loan policy increases fair lending risk. Exceptions should be infrequent and well documented.
What if our policy stats that at consummation, DTI will not be above 36%. Initial rate has payment below 36% but when we “payment shock” it, it is above 36%. I know there is no limit for the small creditor but would this be an exception?