Which of the following best describes a conventional mortgage?

A conventional mortgage is best described as a loan that generally covers up to 80% of the property's market value. This means that the borrower typically needs to make a down payment of at least 20% of the home's value. This characteristic differentiates conventional mortgages from high-ratio mortgages which involve a higher loan-to-value (LTV) ratio and usually require mortgage default insurance because they cover more than 80% of the property's value.

The emphasis on the 80% LTV ratio highlights the standard approach to conventional financing, where the lender seeks to mitigate risk by ensuring that a significant equity position is maintained by the borrower. Borrowers with a conventional mortgage benefit from the absence of mortgage insurance, provided they meet the down payment requirement, reducing their overall financing costs.

The other options do not accurately reflect the typical characteristics of a conventional mortgage. A loan that covers 100% of the property's market value suggests a high-ratio mortgage, which is not conventional. A loan with an LTV of under 70% would far exceed typical conventional loan requirements and imply a sizable down payment. Lastly, a government-guaranteed loan refers to products like FHA loans in the U.S. or Canada Mortgage and Housing Corporation (CMHC) insured loans in