Which of the following statements about conventional loans is incorrect?

The statement indicating that conventional loans typically require lower down payments is incorrect because conventional loans generally require higher down payments compared to government-insured loans, like FHA loans. This misconception may stem from the existence of conventional loans with programs that allow for lower down payments, but these are not the norm. In most cases, lenders prefer a minimum of 5% to 20% down for conventional loans to mitigate risk.

The other statements provide accurate aspects of conventional loans. The variation in policy requirements among lenders highlights the flexibility that lenders may have in their underwriting processes when it comes to conventional loans. The absence of a state law mandating qualifying requirements indicates that lenders set their own criteria, which can lead to differences from one lender to another. Lastly, the fact that conventional loans lack governmental insurance means that they are not backed by entities like the FHA or VA, making them subject to stricter requirements and less leniency regarding down payment structures.