West Virginia Mortgage Law Practice Test 2025 - Free Mortgage Law Practice Questions and Study Guide

A conventional loan is defined as a type of mortgage not backed by a government entity, which makes option B the correct choice. Unlike government-backed loans such as FHA, VA, or USDA loans, conventional loans are typically offered by private lenders and follow guidelines set by entities like Fannie Mae and Freddie Mac. This lack of government backing means that the borrower may be subject to stricter credit score requirements and guidelines for down payments compared to government-sponsored loans.

The idea of a conventional loan revolves around its reliance on the creditworthiness of the borrower and the terms of the loan rather than the security of government guarantees. Furthermore, conventional loans can come with fixed or adjustable interest rates, but the defining feature remains their private backing.

The other options do not accurately define a conventional loan. For instance, being a loan that exclusively serves first-time homebuyers is not applicable because conventional loans can be utilized by buyers at any stage. Additionally, while some conventional loans may offer fixed interest rates, this characteristic alone does not define the loan type, as there are also adjustable-rate conventional loans. Lastly, a mortgage backed by a government entity clearly pertains to programs like FHA and VA, which are distinct from conventional loans.