A non-compliant mortgage is a mortgage loan that does not meet Government Sponsored Enterprise (GSE) guidelines and therefore cannot be resold to agencies such as Fannie Mae or Freddie Mac.
These loans often have higher interest rates than the corresponding mortgages.
Mortgages that exceed the applicable credit limit are classified as non-compliant and are referred to as oversized mortgages.
In addition to the size of the loan, the mortgage may become inappropriate depending on the loan-to-value ratio of the borrower (down payment), debt-to-income ratio, credit score and history, and documentation requirements.