Login
Register
Non-Conforming Loan
What Is a Nonconforming Loan?
A nonconforming loan is a mortgage that does not meet the underwriting guidelines or loan limits established by Fannie Mae or Freddie Mac.
This category includes jumbo loans and specialized loan products.
Nonconforming loans cannot be sold through the traditional agency secondary market.
Why It Matters in a Mortgage
Nonconforming loans may:
- Accommodate unique financial situations
- Allow alternative income documentation
- Carry higher interest rates
- Require larger down payments
Because they involve higher risk or nonstandard criteria, underwriting may be more customized.
How It Works
Lender evaluates borrower using internal standards.
Loan may be held in portfolio or sold privately.
Rates reflect perceived risk.
Nonconforming vs. Conforming
Nonconforming → Outside agency standards
Conforming → Within agency standards
FAQs About Nonconforming Loans
Are jumbo loans nonconforming?
Yes.
Do they require stronger credit?
Often yes.
Are rates higher?
Frequently, but not always.
Related Terms
