The pad size is larger because you need to do via-in-pad and you need an annular ring. 

The solder mask swell = 0 or even -0.05 mm to solder mask define. 

Even if you can use 2 mil trace/space to escape the second rows, the solder mask must always cover the trace to avoid solder bridging between trace and pad. 

A 0.50 mm pitch non-collapsing ball size average is 0.25 mm diameter with a pad of 0.33 mm diameter. This leaves a 0.17 mm gap between pads. 0.05 mm trace/space = 0.15 mm but you must consider a 0.025 mm tolerance on the solder mask registration. 

For fine pitch BGA's using the non-collapsing ball in PCB Library expert program we always have default Solder mask expansion of 0 mils. Do you recommend for all fine-pitch non-collapsing ball to use 0 mils expansion? or what is your recommendation for SM expansion in these cases?

Thanks

This is what a Collapsing BGA Ball looks like -

 

Here is a non-collapsing BGA ball with a solder mask defined pad. IPC has guidance to avoid this, but it's impossible for pin pitches below 0.65 mm if there are traces on the same layer.

 

 

 

Non-collapsing BGA's normally are 0.50 mm pitch or less.

There are various Chip Scale Packages where the mfr. calls the package a BGA but instead of a Ball there is only a bump. This is also a non-collapsing BGA.

All other BGA's are Collapsing Balls.