What describes a loan that is not insured or guaranteed by the government?

A loan that is not insured or guaranteed by the government is referred to as a conventional loan. These types of loans are typically offered by private lenders and do not have government backing, distinguishing them from other loan types such as FHA or VA loans. Conventional loans can either conform to the guidelines set by government-sponsored enterprises like Fannie Mae and Freddie Mac or be non-conforming.

In this context, the other loan types mentioned are government-supported. FHA loans are insured by the Federal Housing Administration, providing lenders with protection against defaults, while VA loans are guaranteed by the Department of Veterans Affairs, making them accessible to qualifying veterans and active-duty service members with favorable terms. Subprime loans, while possibly non-conventional, are not defined by their government backing but rather by the creditworthiness of the borrower, and can be either insured or not. Therefore, conventional loans are specifically characterized by their lack of government insurance or guarantee.