What is the maximum loan-to-value ratio for a conventional mortgage without requiring private mortgage insurance?

The maximum loan-to-value (LTV) ratio for a conventional mortgage without requiring private mortgage insurance (PMI) is indeed 80%. This means that a borrower can finance up to 80% of the property's appraised value or purchase price through a conventional loan, while the remaining 20% generally needs to be covered by the borrower as a down payment.

This standard is put in place because loans that exceed an 80% LTV are considered higher risk for lenders. When the LTV ratio is above this threshold, lenders typically require PMI to protect themselves in case of default, as this insurance can help cover losses incurred from foreclosure.

While other LTV ratios exist for different loan types, such as FHA loans which may allow higher financed amounts, the convention for traditional, conventional mortgages aligns with the 80% limit. Thus, understanding this threshold is critical for both potential homeowners and financial professionals advising on mortgage products.