Is PMI required for a conventional loan with less than 20% down?

Is PMI required for a conventional loan with less than 20% down?

• A. Only If Borrower Requests
• B. Yes
• C. No
• D. Only For VA Loans

Answer: (B)

Private Mortgage Insurance is required on a conventional loan when your down payment is under 20%. This protects the lender because the loan has a higher loan-to-value, meaning there’s more risk if you default. You’ll pay the PMI as part of your monthly mortgage payment, and it stays in place until you build up enough equity—typically around 20%—at which point it can usually be canceled if you’re current on payments. If you can put down 20% or more, PMI isn’t normally required. Note that some other loan types (like VA) don’t use PMI at all, or use different costs, but for a conventional loan with less than 20% down, PMI is the standard rule.

Private Mortgage Insurance is required on a conventional loan when your down payment is under 20%. This protects the lender because the loan has a higher loan-to-value, meaning there’s more risk if you default. You’ll pay the PMI as part of your monthly mortgage payment, and it stays in place until you build up enough equity—typically around 20%—at which point it can usually be canceled if you’re current on payments. If you can put down 20% or more, PMI isn’t normally required. Note that some other loan types (like VA) don’t use PMI at all, or use different costs, but for a conventional loan with less than 20% down, PMI is the standard rule.