Real Estate Term of the Day: Conforming Loan & Non-Conforming Loan

Real Estate Term of the Day: Conforming Loan & Non-Conforming Loan

CONFORMING LOAN – a mortgage loan that is eligible for purchase by the FNMA (Federal National Mortgage Association commonly known as Fannie Mae) or the FHLMC (Federal Home Loan Mortgage Corporation commonly known as Freddie Mac)(Barron’s Dictionary of Real Estate Terms)

NON-CONFORMING LOAN – a mortgage loan that does not meet the standards of, or is too large to be purchased by FNMA or FHLMC (Barron’s Dictionary of Real Estate Terms)

Conforming loans have strict underwriting guidelines that a potential borrower must meet including: credit score,  income requirements, DTI ratios, down payment amounts and the conforming loan limit set by Fannie Mae or Freddie Mac.  Conforming loans may offer a more attractive interest rate for a borrower.

Whereas non-conforming loans may have less restrictive guidelines that a potential borrower must meet.  The biggest differentiator of a non-conforming loan vs a conforming loan is that a non-conforming loan does not follow the conforming loan limits set by Freddie Mac or Fannie Mae.  Loan amounts above $417,000 are considered JUMBO loans and are non-conforming.

If you have any mortgage questions feel free to call Tonnie Gillen (303-996-8821 direct or via email tgillen@pinnacle-mortgage.com) with Pinnacle Mortgage Group.  Tonnie is a local lender that I have worked with over the past several years and highly recommend.  She has a proven track record with me of great service and highly competitive rates.


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