Finance
Private Mortgage Insurance (PMI) is typically required when:
AThe borrower has less than perfect credit
BThe down payment is less than 20% on a conventional loan✓ Correct
CThe loan exceeds the conforming limit
DThe property is an investment property
Explanation
PMI is required on conventional loans when the LTV exceeds 80% (down payment less than 20%). It protects the lender against default losses. Borrowers can request PMI cancellation once the LTV reaches 80% based on original value.
Related California Finance Questions
- Under California's anti-deficiency statutes, which type of loan is protected from a deficiency judgment after non-judicial foreclosure?
- What is amortization in a mortgage?
- What is a 'short sale'?
- A 'hard money loan' is typically characterized by:
- What is a 'due-on-sale' clause?
- An adjustable-rate mortgage (ARM) is best described as:
- A 'purchase money mortgage' is best described as:
- What is the purpose of the Real Estate Settlement Procedures Act (RESPA)?
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →