Conventional loans are not backed by _________.

Conventional loans are not backed by _________.

• A. The government
• B. Private mortgage insurers
• C. The lenders themselves
• D. FHA programs

Answer: (A)

Conventional loans are not backed by the government; they are private loans funded and serviced by lenders, with risk borne by the lender or investors who buy the loan. When the borrower makes a down payment of less than about 20%, private mortgage insurance is typically required to protect the lender, not a government agency. Government backing comes from programs like FHA, VA, and USDA, which insure or guarantee loans, whereas conventional loans are kept private and rely on private insurers or lender agreements rather than a government guarantee.

Conventional loans are not backed by the government; they are private loans funded and serviced by lenders, with risk borne by the lender or investors who buy the loan. When the borrower makes a down payment of less than about 20%, private mortgage insurance is typically required to protect the lender, not a government agency. Government backing comes from programs like FHA, VA, and USDA, which insure or guarantee loans, whereas conventional loans are kept private and rely on private insurers or lender agreements rather than a government guarantee.