Finance
A Minnesota property is purchased for $275,000 with a 10% down payment. The lender requires private mortgage insurance (PMI). PMI is typically required until the loan-to-value (LTV) ratio drops below what threshold?
A90%
B85%
C80%✓ Correct
D75%
Explanation
PMI is typically required on conventional loans when the LTV exceeds 80%. Once the borrower reaches 20% equity (80% LTV), they can request PMI cancellation under the Homeowners Protection Act. For the $275,000 purchase with 10% down, the initial LTV is 90%, so PMI would be required.
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