What percentage of the value typically triggers the requirement for private mortgage insurance?

Private mortgage insurance (PMI) is generally required when a borrower makes a down payment that is less than 20% of the home's purchase price. This means that when the loan amount is more than 80% of the home's value, the lender typically requires PMI to protect against the risk of borrower default. Thus, a loan-to-value ratio exceeding 80% is the standard threshold that triggers PMI requirements, making it crucial for both lenders and borrowers to understand this percentage. This insurance helps lenders manage the added risk associated with lower down payments, which are often indicative of higher default rates. Understanding this threshold is essential in real estate lending practices, as it impacts borrowers' financing options and overall cost structure in acquiring a home.