California Real Estate Practice Exam

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Master the California Real Estate Exam with our comprehensive practice quiz. Get expert tips, detailed content review, and insider strategies to pass on your first try.

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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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.