How can borrowers avoid PMI on a conventional loan?

To avoid private mortgage insurance (PMI) on a conventional loan, borrowers can provide a down payment of at least 20%. PMI is typically required by lenders when the down payment is less than 20% of the home's purchase price. This insurance protects the lender in case the borrower defaults on the loan. By making a down payment of 20% or more, the borrower demonstrates a lower risk to the lender, eliminating the need for PMI.

While other options may relate to loan structures or borrower qualifications, they do not directly address how to avoid PMI specifically for a conventional loan. Government-backed loans often come with their own insurance requirements, fixed-rate mortgages do not influence the necessity for PMI, and having excellent credit may help secure favorable loan terms but does not impact the PMI requirement directly.