A lender will usually require a loan-to-value ratio of ____ or less for you to avoid having to pay private mortgage insurance (PMI).
A) 75%
B) 80%
C) 85%
D) 90%
E) 95%

Question

Quizplus · Accepted Answer

A loan-to-value (LTV) ratio is the amount of the loan compared to the value of the property being purchased. An LTV ratio of 80% or less is typically required by lenders to avoid the need for private mortgage insurance (PMI), which is an extra expense for the borrower. This means that the borrower would need to make a down payment of at least 20% (or have at least 20% equity in the property if they are refinancing) in order to avoid PMI. Therefore, choice B (80%) is the correct answer.

A Lender Will Usually Require a Loan-To-Value Ratio of ____