Non-Conforming Loan

Definition - What does Non-Conforming Loan mean?

A non-conforming loan is one that does not originate from a bank due to the fact that it does not meet normal lending requirements. This could be due to the fact that the borrower does not have a credit rating score that is high enough to borrow money directly from a bank. It could also be that the purpose of the funding is not one that would be covered by the bank, such as in certain types of building ventures.

Justipedia explains Non-Conforming Loan

A non-conforming loan can be a bridging loan in order to meet payments while waiting for a bank loan to come through. It could be a payday loan or other high interest bearing loan that is given to a borrower who would not qualify for credit under normal conditions. The interest and repayment terms are different under this type of loan and are higher than average loans; it is against the law for a non-conforming loan to collect interest above a set amount which varies by state, or for the amount of the loan to be significant in nature, it must be for a short term purpose.

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