Wisconsin Real Estate Sales Practice Exam 2026 – Complete Prep Guide

Question: 1 / 400

What percentage of equity typically requires private mortgage insurance?

15%

20%

When a borrower makes a down payment of less than 20% of the purchase price, private mortgage insurance (PMI) is commonly required by lenders. This insurance protects the lender in the event of default on the mortgage. In general, reaching 20% equity in a home allows the borrower to cancel PMI, as this threshold indicates a lower risk for the lender. Therefore, the requirement for private mortgage insurance begins below this 20% equity mark, making it the correct choice in this context.

This means that options reflecting percentages lower than 20% would not typically warrant PMI. Conversely, percentages higher than 20% indicate sufficient equity where PMI would generally not be necessary.

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25%

30%

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