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

A typical conventional loan is characterized by several key features that distinguish it from other types of financing. One of the primary characteristics is a fixed interest rate, which provides borrowers with the stability of knowing their payment amounts will remain unchanged for the life of the loan. This consistency in payment structure can help borrowers in budgeting and financial planning.

Long-term repayment options are also standard with conventional loans, as they typically allow for extended terms, often ranging from 15 to 30 years. This extended timeframe can make monthly payments more manageable, allowing borrowers to spread the cost of the home over many years.

Furthermore, conventional loans generally have specific down payment requirements, which can range from as low as 3% to as high as 20% or more, depending on the lender and the specific loan program. This down payment requirement ensures that the borrower has a vested interest in the property from the outset.

In contrast, payments of interest only is not a typical feature of a conventional loan. While there are loans available that allow for interest-only payments, such structures are more commonly associated with specific types of loans, like certain adjustable-rate mortgages or other alternative financing options. This method does not lead to the borrower building equity in the property, as they are not paying down the