Final answer:
A borrower will typically need to purchase private mortgage insurance when the Loan to Value ratio is above 80%, meaning the down payment is less than 20% of the home's purchase price.
Step-by-step explanation:
The Loan to Value (LTV) ratio at which a borrower will typically have to purchase private mortgage insurance (PMI) is when the LTV is above 80%.
This means that if a borrower's down payment is less than 20% of the home's purchase price, lenders generally require PMI. This insurance the borrower is unable to make payments and goes into default.
While some borrowers can take advantage of lower down payment options, ranging from 0-3.5%, they come at the cost of the additional PMI fee, which increases the overall mortgage amount paid over time.