What is often a condition for waiving PMI in mortgage lending?

Waiving Private Mortgage Insurance (PMI) is typically contingent upon the borrower making a down payment of at least 20% of the home's purchase price. When a borrower puts down this significant amount, it reduces the lender's risk. PMI is generally required for borrowers who make a down payment of less than 20% because it protects the lender in the event that the borrower defaults on the loan.

While having an excellent credit score can influence loan terms and lower borrowing costs, it alone does not grant automatic waiver from PMI. Similarly, choosing a fixed-rate mortgage or refinancing after five years does not directly affect the PMI requirement. The primary factor that matters in this context is the size of the down payment, which serves as a tangible measure of the borrower's equity in the home right from the outset.