Questions: Private Mortgage Insurance is required by mortgage lenders on certain loans and the cost of this premium is then passed on to the borrower. If you are purchasing a residential property for your primary residence, how much do you generally need as a down payment to avoid being subject to the unnecessary expense of PMI? 20% 0% 5% 50%

The answer is 20%.

This is the correct answer. Private Mortgage Insurance (PMI) is typically required by lenders when the borrower makes a down payment of less than 20% of the home's purchase price. By making a down payment of 20% or more, the borrower can avoid the additional cost of PMI.

This is incorrect. A 0% down payment would almost certainly require PMI, as the lender would consider the loan to be high risk without any initial equity from the borrower.

This is incorrect. A 5% down payment is below the 20% threshold, so PMI would be required to protect the lender against the higher risk of default.

While this is correct in that PMI would not be required with a 50% down payment, it is not the best answer. The question asks for the minimum down payment needed to avoid PMI, which is 20%, not 50%.