Non-conforming Mortgage Definition


A non-conforming mortgage is a mortgage that does not meet loan criteria of Fannie Mae or Freddie Mac due to exceeding loan limits, bad credit or insufficient documentation. Generally, borrowers don't apply for non-conforming mortgage loans if they have nice credit, two years employment with the same employer and funds for 20% down payment.

Examples of Non-conforming Mortgages

If you want credit to purchase a $2 million residence, you need a super jumbo loan - a type of non-conforming mortgage.

If you have funds to make the payments on a mortgage, but you cannot or do not want to document it, or your credit is bad, you have to take a non-conforming mortgage. Your rate and LTV will be determined by your credit.

Non-conforming mortgages are extended to borrowers with recent foreclosure or bankruptcy at very high rates (double digit) and LTV of up to 70%. This is how subprime lenders protect themselves when loaning funds to bad credit borrowers. If the borrower defaults, the first mortgage lender will be able to foreclose on the property netting significant profit.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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