Conforming & Non-conforming Mortgage

A conforming or non-conforming mortgage describes whether a home loan meets standards set by the Federal Housing Finance Agency. Those standards cover the size of the loan, the amount of the down payment and the pace of repayment.

Conforming mortgages are eligible for purchase by Fannie Mae and Freddie Mac, which helps lenders spread their risk and obtain more funds to make loans. Because non-conforming loans cannot be sold to Fannie Mae or Freddie Mac, lenders typically charge higher interest rates for them.