What Is A Non-conventional Loan?

A non-conventional loan, as opposed to conventional loan, is one that does not confirm to the guidelines laid down by either Fannie Mae or Freddie Mac. In the United States most mortgage companies resell their portfolio of loans to either of these government entities or other institutional investors to make credit available for them selves and continue the process of providing loans. Both these agencies have certain criteria by which they define loans that they are willing to buy from mortgage companies. These can include credit score, amount of borrowing, income to debt ratio etc. Generally mortgage companies offer non conventional loans at a slightly higher rate of interest as they cannot resell these. The conditions laid down for non-conventional loans can differ from one lender to another.