Nonconforming Mortgage


DEFINITION of 'Nonconforming Mortgage'

A mortgage that does not meet the guidelines of Government Sponsored Enterprises (GSE) such as Fannie Mae and Freddie Mac, and therefore cannot be sold to Fannie Mae or Freddie Mac. GSE guidelines consist of a maximum loan amount, suitable properties, down payment requirements and credit requirements, among other things.

BREAKING DOWN 'Nonconforming Mortgage'

The percentage of annual mortgage originations that are conforming and nonconforming mortgages varies from year to year as market conditions change. Conforming mortgages are generally more traditional mortgages such as 30-year fixed rate mortgages. Negative amortization mortgages, for example, are nonconforming mortgages.

  1. Fannie Mae - Federal National Mortgage ...

    A government-sponsored enterprise (GSE) that was created in 1938 ...
  2. Negative Amortization

    An increase in the principal balance of a loan caused by making ...
  3. Freddie Mac - Federal Home Loan ...

    A stockholder-owned, government-sponsored enterprise (GSE) chartered ...
  4. Prime

    A classification of borrowers, rates or holdings in the lending ...
  5. Prime Conforming

    A sector of mortgage lending made up of loans to borrowers who ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
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    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>
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