A property appraised at $425,000. The borrower has a first mortgage of $340,000. What is the LTV, and will PMI be required on a conventional loan?

Correct answer: 80% LTV — PMI not required

LTV = $340,000 / $425,000 = 80%. PMI is required when LTV EXCEEDS 80% (i.e., above 80%). At exactly 80%, PMI is NOT required. The borrower can also request PMI cancellation at 80% LTV on existing loans under the Homeowners Protection Act.