What type of loans are referred to as conventional loans?

Conventional loans refer specifically to loans that are not insured or guaranteed by the federal government. This category includes a wide range of mortgage loans that typically conform to the guidelines set by government-sponsored enterprises like Fannie Mae and Freddie Mac, but does not include loans backed by government programs such as FHA or VA loans.

These loans are often characterized by their adherence to stricter credit and income standards, which can make them more appealing to buyers with strong credit histories and stable income. Because these loans are not backed by government entities, borrowers may face higher interest rates than those who qualify for federally insured loans, reflecting the greater risk to lenders.

In contrast, options that discuss government insurance or guarantees pertain to specific loan types like FHA or VA loans, which do not fall under the umbrella of conventional loans. Other choices, like variable interest rates or loans for first-time buyers, do not define what makes a loan conventional, as these attributes can apply to various loan types regardless of whether they are conventional or not. Thus, the accurate identification of conventional loans hinges on their lack of federal insurance or guarantees, making the correct answer clear.