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For General ATR (non QM Loan) we have to use the introductory rate or fully indexed rate, whichever is greater, to qualify the borrower. So for example if our introductory rate is 4.00% and our index is Prime + 1.25% then we would use 4.25% (P+1.25%) to qualify the borrower. Correct? What if it is a 1 year ARM would you still use the rate of 4.25% to qualify the borrower or would you use the maximum rate (ceiling rate) to qualify the borrower?
Check out this post:
The commentary has good examples: https://www.bankersonline.com/regs/12-1026/12-1026-043.html#c
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