Non-conforming mortgage is a home loan that is not eligible to be sold to the Federal National Mortgage Association (FNMA), better known as "Fannie Mae", or the Federal Mortgage Home Loan Corporation (FHLMC), nicknamed "Freddie Mac". Nonconforming loans can be ineligible for many reasons, but usually because of high loan amount.

Non Conforming Loans will come with higher interest rates to offset the risk that these lenders will face. However the increase interest rate comes with other compensating factors to help you secure a loan such as higher allowable debt to income ratios.

Many times non-conforming loans are referred to as "jumbo loans" due to there loan size. Many borrowers opt for a "combo loan", or 1 loan to the maximum conforming limit and a second loan for the remaining balance. Many borrowers enjoy the ability to retire the smaller debt first and have a more manageable conforming loan rate.

Loans may be non-conforming due to your credit score or something unique about your property type, however loans over $417,000 for single family homes are also considered non conforming for the purposes of this definition.

Non-conforming loans do not just mean that a person has bad credit or anything like that. Non-conforming loans may be needed by a consumer for many reasons. A person who needs to borrow 100% of their home or maybe even more than 100% of their home's value may need to go with a non-conforming loan. A person who can not document their income may need a non-conforming loan. A person with no reserves, may also not qualify for a conforming loan and have to go ahead with a non-conforming loan. Therefore, the term non-conforming loan does not necessarily mean that a person has bad credit, just that they either don't fit conforming loan guidelines or they need something that a conforming loan doesn't offer.