What is the difference between conforming, non-conforming and portfolio loans?
Thank you for using our 425.com mortgage website. You have requested information on What is the difference between conforming, non-conforming and portfolio loans? A loan that conforms to the guidelines established by Fannie Mae or Freddie Mac is considered a conforming loan. These guidelines establish the maximum loan amount, down payment, borrower credit & income requirements, and suitable properties. Lenders that make loans established to these guidelines may sell those loans to Fannie Mae or Freddie Mac. These lenders may retain the servicing on these loans so that a borrower will continue to make payments to the original lender. Conforming loans make up the majority of loans in the U.S. A loan that is larger than the conforming loan limit is called a Jumbo loan. Loans that do not meet the credit quality of conforming loans (‘A’ paper) are called ‘B’,’C’ and ‘D’ paper loans. Second mortgage loans – credit lines, home equity loans, home improvement loans are also non-conforming loans
