PMI is required for conventional loans when LTV exceeds what percentage?

PMI is required for conventional loans when LTV exceeds what percentage?

• A. 90%
• B. 80%
• C. 70%
• D. 100%

Answer: (B)

PMI on conventional loans is tied to how much of the property's value you’re borrowing relative to the value itself. If the loan amount is more than 80% of the property's value (you have less than 20% equity), lenders typically require private mortgage insurance to protect them against the higher risk of a larger loan relative to value. This threshold is 80% LTV; once you reach 80% or lower, PMI can often be canceled (subject to the loan terms and payment history). The other percentages don’t fit the standard rule: 70% implies a larger down payment and usually no PMI, while 90% or 100% LTV would still fall above the threshold and generally require PMI in conventional financing.

PMI on conventional loans is tied to how much of the property's value you’re borrowing relative to the value itself. If the loan amount is more than 80% of the property's value (you have less than 20% equity), lenders typically require private mortgage insurance to protect them against the higher risk of a larger loan relative to value. This threshold is 80% LTV; once you reach 80% or lower, PMI can often be canceled (subject to the loan terms and payment history). The other percentages don’t fit the standard rule: 70% implies a larger down payment and usually no PMI, while 90% or 100% LTV would still fall above the threshold and generally require PMI in conventional financing.