What is the minimum down payment required for obtaining Private Mortgage Insurance (PMI) on a loan?

The minimum down payment required to obtain Private Mortgage Insurance (PMI) is generally understood to be around 5% for conventional loans. When a borrower makes a down payment of less than 20%, PMI typically is required to protect the lender against the risk of default.

In many cases, the commonly recognized minimum for FHA loans, which have their own insurance requirements, is often cited as 3.5%. However, this does not directly pertain to PMI on conventional loans. Instead, PMI is often discussed in the context of loans with down payments between 5% to 20%.

Therefore, the assertion that the minimum down payment necessary for PMI is 3% lacks typical industry support, as traditionally a higher down payment such as 5% is expected for PMI coverage on conventional loans. The answer selected does not align with the standard practices for PMI eligibility.