Which conventional loan-to-value ratio does not require private mortgage insurance?

A loan-to-value (LTV) ratio indicates the proportion of a loan to the value of the property being purchased. Typically, for conventional loans, an LTV ratio of 80% or lower indicates that the borrower is putting down at least 20% of the purchase price as a down payment. This lower LTV reduces the lender's risk significantly, as there is a larger equity cushion should the borrower default.

When the LTV is 80% or less, the lender generally does not require private mortgage insurance (PMI). PMI is commonly needed for higher LTV ratios to protect the lender in case of borrower default. Therefore, an 80% LTV ratio signifies a lower risk for the lender and eliminates the necessity for PMI.

In contrast, higher LTV ratios such as 85%, 90%, or 95% typically lead to the requirement for PMI because those ratios indicate that the borrower has less equity in the property, increasing the lender's risk profile.