Is a conventional loan insured and guaranteed by the government?

Is a conventional loan insured and guaranteed by the government?

• A. YES
• B. SOMETIMES
• C. NOT GUARANTEED
• D. NO

Answer: (D)

Conventional loans are not insured or guaranteed by the government. They’re funded by private lenders and rely on private mortgage insurance (PMI) if the down payment is below 20%. Government backing exists for FHA, VA, and USDA loan programs, not for conventional loans. Some conventional loans may be conforming and sold to Fannie Mae or Freddie Mac, but that’s a secondary-market arrangement, not a government guarantee of the loan itself. So the correct takeaway is that a conventional loan is not insured or guaranteed by the government.

Conventional loans are not insured or guaranteed by the government. They’re funded by private lenders and rely on private mortgage insurance (PMI) if the down payment is below 20%. Government backing exists for FHA, VA, and USDA loan programs, not for conventional loans. Some conventional loans may be conforming and sold to Fannie Mae or Freddie Mac, but that’s a secondary-market arrangement, not a government guarantee of the loan itself. So the correct takeaway is that a conventional loan is not insured or guaranteed by the government.