What is a non-conforming mortgage?


Mortgage loans can be conforming or non-conforming. Conforming mortgages meet the guidelines of government enterprises, such as Fannie Mae and Freddie Mac, and can be sold on the secondary market.

More about non-conforming

Non-conforming mortgages do not meet those guidelines for one of any number of reasons and are considered riskier loans. The most common reason is the size of the mortgage. Borrowers who wish to borrow more than what the conforming loan limit of the area is would take out a type of non-conforming loan, called a jumbo loan.

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For example, the conforming loan amount in many counties is $417,000, so if you took out a loan for more than that, it would be a non-conforming loan. Other types of loans considered non-conforming would be a loan over 90% of the home’s price, a loan to someone with bad credit, or a loan to someone who just filed bankruptcy.

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