What typically characterizes a conventional loan?

A conventional loan is typically characterized by not meeting government lending standards, which distinguishes it from government-insured loans such as FHA or VA loans. These loans are offered by private lenders and can either be conforming, which means they meet the guidelines set by government-sponsored enterprises like Fannie Mae and Freddie Mac, or non-conforming.

Conventional loans usually have stricter requirements like a higher credit score and a lower debt-to-income ratio compared to government-backed loans. Additionally, they are not specifically designed for first-time buyers; anyone can apply for a conventional loan as long as they meet the lender's requirements. Overall, the defining characteristic of a conventional loan is its nature of being unguaranteed by the government, which is why the second option accurately describes it.