Definitions

• A jumbo conventional loan exceeds the conforming loan standards set by Fannie Mae or Freddie Mac each year. Adjustable rate mortgage, or ARM, home loans are also non-conforming to government standards because the interest rate adjusts.
  
  

Significance

• Whenever a loan is non-conforming, it cannot be purchased by or issued by these government-supported institutions. Therefore, both jumbo loans and ARM loans will not qualify for federal programs provided by Fannie Mae, Freddy Mac or the Federal Housing Administration.
  
  

Warning

• Do not mistake a conventional loan for a conforming loan. Plenty of private mortgage loans are termed "conventional," despite their inability to conform to national lending standards. These loans may have higher costs and risks than conforming loans.