Which type of loan is characterized by not being backed by a government program?

A conventional loan is characterized by not being backed by a government program. This type of loan is typically funded by private lenders, like banks or mortgage companies, and adheres to the guidelines set by Fannie Mae and Freddie Mac, which are government-sponsored enterprises. Conventional loans allow for a wide range of options regarding down payments, interest rates, and loan terms, but they do not rely on federal insurance or guarantees to protect lenders against default.

In contrast, FHA loans are insured by the Federal Housing Administration, making them accessible to borrowers with lower credit scores and smaller down payments. VA loans are backed by the Department of Veterans Affairs, offering favorable terms to eligible veterans and service members. USDA loans are designed to promote home ownership in rural areas and are also backed by a government program, the United States Department of Agriculture. Therefore, the absence of any government backing for conventional loans distinguishes them from these other types of loans.