Which of the following is a key requirement for conventional mortgages?

The key requirement for conventional mortgages is that private mortgage insurance is needed if the loan-to-value (LTV) ratio is above 80%. This is because conventional loans are typically not backed by the government, which means that lenders require this insurance as a way to protect themselves against the risk of borrower default when the borrower has less than 20% equity in the home. PMIs allow borrowers to qualify for a mortgage even with a smaller down payment, thereby expanding access to home financing.

The other options, while they may apply in some specific circumstances, do not define the nature of conventional mortgages as clearly. For example, some conventional loans do require a down payment, and while there are no government guarantees associated with conventional loans, FHA loans are backed by the government. In addition, interest rates on conventional loans can vary based on many factors, and they are not universally lower than FHA loans. Thus, the requirement of private mortgage insurance for high LTV loans is distinctly characteristic of conventional mortgages.