Mortgage insurance is required for all loans sold to Fannie Mae and Freddie Mac with loan-to-value ratios greater than what percentage?

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Multiple Choice

Mortgage insurance is required for all loans sold to Fannie Mae and Freddie Mac with loan-to-value ratios greater than what percentage?

Mortgage insurance is required on conventional loans sold to Fannie Mae and Freddie Mac when the borrower has a down payment of less than 20%, i.e., when the loan-to-value is above 80%. The LTV is calculated by dividing the loan amount by the property's value (purchase price or appraised value, whichever is lower). When LTV exceeds 80%, private mortgage insurance protects the lender against the higher risk of default. Once enough equity is built (LTV reaches 80% or less, subject to timing and documentation), PMI can often be removed. This is why the correct threshold is LTV greater than 80%.

Mortgage insurance is required on conventional loans sold to Fannie Mae and Freddie Mac when the borrower has a down payment of less than 20%, i.e., when the loan-to-value is above 80%. The LTV is calculated by dividing the loan amount by the property's value (purchase price or appraised value, whichever is lower). When LTV exceeds 80%, private mortgage insurance protects the lender against the higher risk of default. Once enough equity is built (LTV reaches 80% or less, subject to timing and documentation), PMI can often be removed. This is why the correct threshold is LTV greater than 80%.

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