Many people are well aware of what the definition of a conforming loan, but some may not know what a non-conforming mortgage is. This type of loan is also very commonly referred to as a “jumbo mortgage. The reason it is considered a jumbo mortgage is because the loans balance exceeds the typical limit allowed to be lent to the borrower. This type of loan is much more common in the United States of America, than any other place in the world.

The way that a conforming loan and a non-conforming mortgage differ has to do mainly with the loans total balance that the mortgage company offers to the borrower. With a normal conforming mortgage there is a maximum limit set forth by the Government Sponsored Enterprises (GSE) that manages how much the mortgage lender is allowed to lend to their clients. The government guidelines issued a certain limit for single family residents, secondary housing, and also will depend mainly on the size of the property. Loans that exceed the limit for loans are referred to as non-conforming loans.

Today the maximum amount allowed to be lent under a standard conforming loan is $417,000 and any mortgage that exceeds this amount is considered a jumbo loan. In order to qualify for this type of loan you will be required to have a good credit rating to prove to the lender you can manage the monthly payments. Other qualifications will be based off guidelines very similar to a regular mortgage including the calculation of your monthly budget, income, credit, etc. 

But these jumbo loans are very similar to conforming mortgages because they will also offer the borrower a fixed rate or adjustable rate mortgage. This type of loan will usually come with a slightly higher interest rate than normal. Anyone applying for this type of mortgage should expect to pay at least a 1-2% higher interest rate than normal.

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.