True or False: Mortgage Insurance is required when a borrower has a down payment of less than 20% when buying a home.

The statement is true because mortgage insurance is typically required when a borrower makes a down payment of less than 20% on a conventional loan. This requirement exists to protect the lender in case the borrower defaults on the loan. Mortgage insurance can take the form of Private Mortgage Insurance (PMI) for conventional loans and is often required by lenders when the loan-to-value (LTV) ratio exceeds 80%. It serves as a risk management tool for lenders, encouraging them to provide financing to borrowers who might not have a substantial down payment while also ensuring that borrowers are motivated to make their payments, as defaulting would lead to the loss of property and financial obligation associated with the insurance.

In contrast, other options like "Only for government-backed loans" or "Depends on the loan amount" do not fully encompass the requirement for conventional loans, which applies broadly to those with a lower down payment. Therefore, the necessity for mortgage insurance when the down payment is under 20% stands as a widely accepted principle in mortgage lending.