What type of mortgage insurance coverage does a Standard Conventional loan typically require?

A Standard Conventional loan typically does not require mortgage insurance unless the borrower pays less than 20% as a down payment. The correct answer highlights that mortgage insurance is not a default requirement; therefore, answer C can be interpreted to indicate coverage is not universally necessary, unlike other loan types that mandate insurance regardless of the down payment size.

In a standard scenario, if a borrower does put down less than 20%, private mortgage insurance (PMI) would be required; however, this PMI does not fit under a specific percentage of loan coverage like 35%, as indicated in the correct answer. The options involving percentages of upfront costs or annual payments refer to Federal Housing Administration (FHA) loans or other types of loans that have specific insurance requirements. Understanding that conventional loans have flexibility regarding insurance based on the down payment provides clarity on why certain types of coverage are not applicable.

In summary, while implicitly correct about insurance coverage, particularly with higher down payments, the focus on such a percentage coverage itself distracts from the broader context that standard conventional loans may not require any mortgage insurance when conditions are favorable.