Nonconforming Mortgage Definition

Any mortgage that does not meet the requirements specified by Fannie Mae and Freddie Mac is considered to be a nonconforming loan. Common reasons for nonconformance include an excessive loan amount, unsuitable real estate, insufficient down payment, or poor credit scores for the borrower. Conforming mortgages are usually traditional, thirty-year fixed rate mortgages, while nonconforming mortgages include negative amortizing mortgages and other nontraditional mortgages.