Which type of loan most likely requires private mortgage insurance?

Private mortgage insurance (PMI) is typically required for conventional loans with a loan-to-value (LTV) ratio that exceeds 80%. This is because lenders consider higher LTV ratios as riskier; thus, they want the added security of PMI to protect themselves in case of borrower default.

In this context, a loan with a 90% LTV ratio would necessitate PMI, as the borrower is financing 90% of the property's value and therefore has less equity in the home. This lower level of equity presents a higher risk to the lender, leading to the requirement for PMI.

On the other hand, a 100% LTV conventional loan does not fall under the norm for conventional loans, as most lenders do not offer 100% financing. FHA loans typically require a different type of mortgage insurance known as upfront mortgage insurance premium (UFMIP) and annual mortgage insurance premiums, which is distinct from PMI. VA loans do not require mortgage insurance at all, as they are backed by the Department of Veterans Affairs and designed to provide benefits for eligible veterans, reducing the need for mortgage insurance.