What is a non conforming loan?

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John C Brandy, Financial Consultant (Hourly)

@brandyjc • 09/26/16 This answer was first published on 09/26/16. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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This means that the amount needed to fund the loan is in excess of what is currently defined as the conforming limit.

For most places that's $417,000. If your house is worth more than that and you need to finance more than that then your loan will be "non-conforming". Oddly enough, as of this writing it's possible to get one of those at a better interest rate than one which is "conforming". Seems backward, but it is what it is.

Here's a link to the details straight from FHFA, who sets the numbers.

https://www.fhfa.gov/Media/PublicAffairs/Pages/2016-Maximum-Fannie-and-Freddie-Conforming-Loan-Limits-Established.aspx

In this you can also find out which 39 counties in the US are considered more expensive, so the conforming limit is higher there.

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