When is private mortgage insurance (PMI) typically required on a conventional loan?
Correct Answer
A) When the loan-to-value ratio exceeds 80%
PMI is typically required on conventional loans when the loan-to-value (LTV) ratio exceeds 80%, meaning the borrower has less than 20% equity in the property. This requirement protects the lender against potential losses from default.
Why This Is the Correct Answer
PMI is typically required on conventional loans when the loan-to-value (LTV) ratio exceeds 80%, meaning the borrower has less than 20% equity in the property. This requirement protects the lender against potential losses from default.
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