Which of the following is NOT characteristic of a conventional loan?

A conventional loan is characterized primarily by its lack of government backing. Unlike government-backed loans, such as FHA or VA loans, a conventional loan does not have a guarantee from a government agency. This means that the lender assumes the risk associated with the loan, making it essential for the borrower to meet strict credit requirements and often to provide a down payment.

The other options highlight typical features of conventional loans. Requiring a down payment is common, as lenders usually expect some level of investment from the borrower. Additionally, many conventional loans offer fixed interest rates, allowing borrowers to have predictable payments over the life of the loan. Furthermore, conventional loans are widely used for purchasing property, including both residential and commercial real estate. Thus, while the first, third, and fourth choices reflect standard characteristics of conventional loans, the second choice is distinct in that it incorrectly suggests a feature associated with government-backed loan programs, making it the correct answer to the question.