Which financial instrument often requires private mortgage insurance (PMI)?

Private Mortgage Insurance (PMI) is typically required when a borrower makes a down payment of less than 20% of the home's purchase price. This insurance protects the lender in case the borrower defaults on the loan, as a lower down payment correlates with a higher risk for the lender.

A loan with a 90% loan-to-value (LTV) ratio means the borrower is financing 90% of the home's value, which indicates a down payment of only 10%. Since this falls below the 20% threshold, PMI is generally required to offset the lender's risk.

While other options may mention different percentages and loan types, they do not consistently reflect the scenario where PMI would be mandated based on the loan-to-value ratio criteria. The specifics of PMI requirements align closely with the 90% LTV scenario, making it the correct choice in the context of this question.