Finance
What is 'private mortgage insurance' (PMI) and when is it required in Nevada?
AInsurance that pays off the mortgage if the borrower dies
BInsurance protecting the lender when the borrower makes a down payment of less than 20%, reducing the lender's risk of loss on conventional loans✓ Correct
CInsurance required on all FHA loans regardless of down payment
DA Nevada-specific requirement for all new construction loans
Explanation
PMI is required on conventional loans when the loan-to-value ratio exceeds 80% (down payment less than 20%). It protects the lender, not the borrower. Under the Homeowners Protection Act, PMI must automatically cancel when the LTV reaches 78% based on original value. In Nevada's market, many first-time buyers with smaller down payments pay PMI until sufficient equity is built.
Related Nevada Finance Questions
- In Nevada, the homestead exemption protects:
- What is a HELOC in Nevada real estate?
- What is a jumbo loan in the context of Nevada's Las Vegas real estate market?
- A loan-to-value (LTV) ratio of 80% on a $350,000 property means the loan amount is:
- What is a 'wraparound mortgage' (all-inclusive deed of trust) and how is it used in Nevada?
- Which federal law requires lenders to provide a Loan Estimate within 3 business days of receiving a complete loan application?
- What is a discount point in Nevada mortgage financing?
- What is the loan-to-value (LTV) ratio and why is it important to Nevada lenders?
Practice More Nevada Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Nevada Quiz →