Which statement best describes conventional loans?

Conventional loans are characterized by their lack of government backing, which means they are not insured or guaranteed by federal entities such as the FHA, VA, or USDA. Instead, the approval of these loans primarily relies on the borrower's creditworthiness. Lenders evaluate the borrower's credit score, income, debt-to-income ratio, and overall financial stability to assess risk. This reliance on the borrower’s financial profile distinguishes conventional loans from government-backed options that might have more flexible eligibility criteria.

While it is true that conventional loans may come with different conditions regarding mortgage insurance, lower costs, or repayment terms, the defining feature is their dependence on the borrower's credit profile without the safety net provided by government involvement. This makes option C the best description of conventional loans.