Which of the following is a common reason for a lender to require mortgage insurance?

A common reason for a lender to require mortgage insurance is due to a low down payment. When a borrower makes a smaller down payment on a home, it represents a higher risk for the lender. This is because the borrower has less equity in the property from the outset, making them more likely to default on the loan. Mortgage insurance helps protect the lender in case the borrower cannot meet their repayment obligations. By securing this insurance, lenders can mitigate their risk when lending to borrowers who may not have substantial equity to back their investment.

The other options, while they may pertain to various aspects of a mortgage or loan, do not typically prompt the necessity for mortgage insurance. A high credit score usually results in better loan terms and a lower risk for the lender, making mortgage insurance unnecessary. A fixed interest rate simply refers to the structure of the loan payments and does not impact the requirements for mortgage insurance. Similarly, a long loan term may influence the total interest paid over the life of the loan, but it does not directly relate to the need for mortgage insurance.