Private Mortgage Insurance (PMI) is typically required on a conventional loan when the borrower's down payment is less than what percentage of the purchase price?

Correct answer: 20%

Lenders require PMI on conventional loans when the loan-to-value (LTV) ratio exceeds 80%, meaning the borrower has put down less than 20% of the purchase price. PMI protects the lender in the event of borrower default. Once the borrower's equity reaches 20% (LTV of 80%), they may request PMI cancellation under the Homeowners Protection Act. Down payments of 5%, 10%, or 15% all result in an LTV above 80% and therefore require PMI.