Private sector loans without a government guarantee or insurance are called ____________.

Private sector loans without a government guarantee or insurance are termed conventional loans. These loans are typically offered by private lenders such as banks and credit unions. Because they are not insured by the government, they must adhere to specific lending standards, such as creditworthiness and debt-to-income ratios, set forth by the lender and the secondary mortgage market, like Fannie Mae and Freddie Mac.

Conventional loans can be either conforming or non-conforming. Conforming loans meet the guidelines set by Fannie Mae and Freddie Mac, while non-conforming loans do not and may carry higher interest rates or stricter requirements due to the lack of government backing. Understanding the characteristics of conventional loans is essential for anyone looking to navigate the real estate market, as they represent a significant portion of the mortgage market.

In contrast, other types of loans like FHA loans and VA loans are backed by government agencies, which provide guarantees or insurance to the lenders, reducing their risk and often allowing for more flexible lending criteria. Subprime loans are aimed at borrowers with lower credit scores, often featuring higher interest rates and less favorable terms, but still fall under a different category that doesn't describe the absence of government insurance or guarantees.