Origination ActivitiesQuestion 271 of 400
A borrower makes a 20% down payment on a conventional loan. What is one common effect on the loan structure?
a.Private mortgage insurance is generally not required at 80% LTV or below
b.The interest rate must be adjustable
c.An escrow account is prohibited
d.The appraisal is waived automatically
Explanation
On a conventional loan, a 20% down payment puts the loan at 80% loan-to-value, which typically eliminates the requirement for private mortgage insurance (PMI). The down payment does not force an adjustable rate, prohibit escrow, or automatically waive the appraisal.
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