non-conforming loan

Definition

Any mortgage that doesn't meet Fannie Mae or Freddie Mac guidelines, whether due to size, property type, or borrower qualifications. It's the misfit toy of lending, typically more expensive and harder to get.

Example Usage

My yurt requires a non-conforming loan because apparently Fannie Mae has opinions about alternative housing.

Origin

Mortgage classification term from the 1990s loan standardization era

Fun Fact

Portfolio lenders keep non-conforming loans on their books instead of selling them, which means they can be more flexible or completely arbitrary.

Source: Mortgage lending and loan classification terminology

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