California Real Estate Practice Exam

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Study for the California Real Estate Exam with confidence. Engage with interactive questions designed to enhance your understanding of real estate principles, laws, and practices. Prepare thoroughly for your licensing test and ensure you have the knowledge to succeed in your real estate career!

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What is the loan to value ratio above which a borrower will typically have to purchase private mortgage insurance?

70%
80%
90%
100%

The correct answer is: 80%

The correct answer is B because 80% is considered the threshold for most lenders to require private mortgage insurance (PMI). PMI is typically required when the loan to value ratio exceeds 80%, meaning the borrower is borrowing more than 80% of the value of the property. This requirement is in place to protect the lender in case the borrower defaults on the loan. Options A, C, and D are incorrect because they either fall below or exceed the 80% threshold, making them less likely to trigger the requirement for PMI.