Qualified Mortgage Bond Law and Legal Definition

A qualified mortgage bond is a type of tax-exempt private activity bond. The proceeds from a qualified mortgage bond are generally used for providing financial assistance to single-family residential property. Hence the proceeds from a qualified mortgage bond can be used for purchasing, making improvement, or for rehabilitating an owner-occupied residence. It can also be used for financing qualified home-improvement loans. Such proceeds do not include the issuance costs and reasonably required reserves.

The following is an example of a state statute defining the term qualified mortgage bond. According to [26 USCS § 143 (a)(1)], the term "qualified mortgage bond" means a bond which is issued as part of a qualified mortgage issue.