Above which loan-to-value ratio must borrowers typically purchase private mortgage insurance?

Private Mortgage Insurance (PMI) is generally required when the loan-to-value (LTV) ratio exceeds a certain threshold, primarily to protect lenders against the risk of borrower default. The typical point at which PMI becomes necessary is when the LTV ratio is above 80%. This means that if a borrower is putting down less than 20% of the property's purchase price, lenders will often require PMI as a safeguard for the additional risk taken on by lending more than 80% of the property's value.

This requirement stems from the fact that a higher LTV ratio signifies a greater risk for the lender, as there is less equity in the property should the borrower default. PMI provides a way to mitigate that risk by ensuring that the lender can recover losses if the property must be foreclosed on.

Options that suggest LTV ratios of 75%, 85%, or 90% either represent lower thresholds where PMI is not required or represent higher risk scenarios that would dictate different terms or products, but not the standard practice for when PMI is typically mandated. Thus, the requirement for purchasing PMI begins at the point when the LTV exceeds 80%.