Non-Conforming Loan

What is a non-conforming loan? 🤔

A non-conforming loan in real estate is a type of mortgage that does not meet the purchasing standards set by federal agencies such as Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation).

These standards involve size, the borrower’s credit history, debt-to-income ratio, and others.

Non-conforming loans typically have higher interest rates and may carry more risk, but they offer flexibility for borrowers who don’t qualify for conventional loans.

They are often used for luxury, high-priced, or investment properties.

Examples include jumbo loans which exceed the conforming loan limits established by federal regulations.