---
title: "What must a lender verify about a borrower's ability to repay a mortgage? Answer in under 100 words. Cite only eCFR (www.ecfr.gov) sources."
canonical: https://www.m-i-n-d.ai/minds/mortgage-lending/ability-to-repay-verification
jurisdiction: "US Federal"
last_verified: 2026-08-28
license: CC BY 4.0 — https://creativecommons.org/licenses/by/4.0/
attribution: "Source: MIND (m-i-n-d.ai)"
---

# What must a lender verify about a borrower's ability to repay a mortgage? Answer in under 100 words. Cite only eCFR (www.ecfr.gov) sources.

Under 12 CFR 1026.43, a creditor must make a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms. The creditor must consider the consumer's current or reasonably expected income or assets, employment status, monthly payment on the covered transaction, monthly payment on any simultaneous loan, mortgage-related obligations, current debt obligations, alimony, child support, monthly debt-to-income ratio or residual income, and credit history, with income/assets and debt obligations verified using reasonably reliable third-party records.

## Details / How it works

Section 1026.43(c) sets the general ability-to-repay standard. Paragraph (c)(1) requires a reasonable and good faith determination at or before consummation. Paragraph (c)(2) lists the eight categories the creditor must consider: income/assets, employment status (if income from employment is used), the covered transaction's monthly payment, payments on any simultaneous loan, mortgage-related obligations, current debt obligations plus alimony and child support, the monthly debt-to-income ratio or residual income, and credit history. Paragraph (c)(3) requires verification using reasonably reliable third-party records, with the income/asset verification rule detailed in (c)(4).

## Numbers & thresholds

| Requirement | Threshold / Rule |
|---|---|
| Determination timing | At or before consummation |
| Verification of income or assets (c)(4) | Third-party records providing reasonably reliable evidence (e.g., IRS tax-return transcripts, W-2s, payroll statements, financial institution records, employer records, government agency records) |
| Verification of debt obligations (c)(3)(iii) | Credit report suffices; unlisted debts from the application need not be independently verified |
| Employment status (c)(3)(ii) | May be verified orally if a record is prepared |
| Payment calculation (c)(5) | Fully indexed rate or introductory rate, whichever is greater; substantially equal monthly, fully amortizing payments |


## Exceptions & edge cases

The ability-to-repay rule does not apply to home equity lines of credit under § 1026.40, reverse mortgages under § 1026.33, timeshare plans, temporary or "bridge" loans of 12 months or less, the construction phase of a construction-to-permanent loan, Housing Finance Agency programs, and certain mission-based creditors (CDFIs, Downpayment Assistance through Secondary Financing Providers, Community Housing Development Organizations, and 501(c)(3) creditors meeting low-volume and low/moderate-income limits). A creditor refinancing a non-standard mortgage into a standard mortgage may be exempt under paragraph (d).

## Sources

- [1] U.S. Government Publishing Office / Consumer Financial Protection Bureau — 12 CFR 1026.43 — TILA — ability-to-repay requirements and qualified mortgages · https://www.ecfr.gov/current/title-12/section-1026.43 · as of 2026-08-28