Finance
Private Mortgage Insurance (PMI) is typically required when the buyer's down payment is less than:
A5%
B10%
C20%✓ Correct
D25%
Explanation
PMI is generally required when the borrower puts less than 20% down, as it protects the lender against default risk when the borrower has less equity in the property.
People Also Study
Related New Mexico Questions
- Private Mortgage Insurance (PMI) is typically required when the buyer's down payment is:Finance
- What is the minimum down payment required for an FHA loan for a borrower with a credit score of 580 or higher?Finance
- In New Mexico, 'private mortgage insurance' (PMI) is typically required when:Finance
- A borrower has a gross monthly income of $6,000. Using a 28% front-end ratio, what is the maximum monthly housing payment the lender will typically approve?Finance
- Title insurance protects the insured against:Escrow & Title
- Which type of title insurance policy protects the lender?Escrow & Title
- In New Mexico, title insurance protects against:Escrow & Title
- A lender's title insurance policy in New Mexico protects:Escrow & Title
Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
Study This Topic
Practice More New Mexico Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New Mexico Quiz →