Private Mortgage Insurance (PMI) is typically required when:
Why The down payment is less than 20% on a conventional loan Is Correct
Answer B: The down payment is less than 20% on a conventional loan
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
People Also Study
Related California Questions
- Private Mortgage Insurance (PMI) is typically required when a borrower's down payment is:Finance
- Title insurance that protects the lender against losses due to title defects is called:Escrow & Title
- Private Mortgage Insurance (PMI) is typically required by conventional lenders when the LTV exceeds:Finance
- Which federal law prohibits lenders from discriminating against borrowers based on race, color, religion, national origin, sex, familial status, or disability when making mortgage loans?Finance
- Under conventional lending standards, what is the maximum LTV ratio for a first mortgage on a single-family home that does NOT require private mortgage insurance (PMI)?Finance
- A borrower's monthly gross income is $8,500. The lender uses a 43% maximum DTI. The borrower has $850 in existing monthly debt payments. What is the maximum allowable monthly mortgage payment?Real Estate Math
- Which type of title insurance policy protects the lender's interest in a mortgaged property?Escrow & Title
- Which type of title insurance protects the lender?Escrow & Title
Key Terms to Know
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →