Private mortgage insurance (PMI) is usually required on ______ loans with loan-to-value ratios greater than _____ percent.

Private mortgage insurance (PMI) is specifically designed to protect lenders in case the borrower defaults on a loan. It is commonly required for home loans when the loan-to-value (LTV) ratio exceeds a certain threshold, typically set at 80 percent. This means that if a borrower is making a down payment that is less than 20 percent of the property's purchase price, lenders usually mandate PMI.

Having PMI offers a safety net for lenders because it mitigates their risk, which is especially relevant in scenarios where the borrower has a lower equity stake in the property. As a result, should they default on their mortgage, the lender has some level of compensation through the PMI policy. This practice also allows borrowers with smaller down payments to access home financing that they may not otherwise qualify for due to the increased risk perceived by lenders.

In contrast, investment properties, commercial loans, and vacation homes have different standards and criteria regarding down payment requirements and related insurance needs, making the option related to home loans with the specifics of an 80 percent LTV the most accurate choice in this context.