B2-1.2-02, Combined Loan-to-Value (CLTV) Ratios (12/04/2018)

For first mortgage loans that are subject to subordinate financing, the lender must calculate the LTV ratio and the CLTV ratio. For first mortgage loans that are subject to a HELOC, see B2-1.2-03, Home Equity Combined Loan-to-Value (HCLTV) RatiosB2-1.2-03, Home Equity Combined Loan-to-Value (HCLTV) Ratios. For all other subordinate liens, see B2-1.2-04, Subordinate FinancingB2-1.2-04, Subordinate Financing for additional information.

The CLTV ratio is determined by dividing the sum of the items listed below by the lesser of the sales price or the appraised value of the property.

• the original loan amount of the first mortgage,

• the drawn portion (outstanding principal balance) of a HELOC, and

• the unpaid principal balance of all closed-end subordinate financing. (With a closed-end loan, a borrower draws down all funds on day one and may not make any payment plan changes or access any paid-down principal once the loan is closed.)

Note: For each subordinate liability, in order for the lender to accurately calculate the CLTV ratio for eligibility and underwriting purposes, the lender must determine the drawn portion of all HELOCs, if applicable, and the unpaid principal balance for all closed-end subordinate financing. If any subordinate financing is not shown on a credit report, the lender must obtain documentation from the borrower or creditor.

If the borrower discloses, or the lender discovers, new (or increased) subordinate financing after the underwriting decision has been made, up to and concurrent with closing, the lender must re-underwrite the mortgage loan. (See B3-6-02, Debt-to-Income RatiosB3-6-02, Debt-to-Income Ratios, for additional information.)

Note: The CLTV ratio calculation may differ for certain mortgage loans. For details on these differences, see  B2-1.3-05, Payoff of Installment Land Contract RequirementsB2-1.3-05, Payoff of Installment Land Contract Requirements; B5-2-03, Manufactured Housing Underwriting RequirementsB5-2-03, Manufactured Housing Underwriting Requirements; B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing TransactionsB5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions; B5-3.2-03, HomeStyle Renovation Mortgages: Collateral ConsiderationsB5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations; B5-3.3-01, HomeStyle Energy for Improvements on Existing PropertiesB5-3.3-01, HomeStyle Energy for Improvements on Existing Properties; B5-5.1-02, Community Seconds Loan EligibilityB5-5.1-02, Community Seconds Loan Eligibility; and  B5-5.2-02, Loans with Resale Restrictions: Eligibility, Collateral and Delivery RequirementsB5-5.2-02, Loans with Resale Restrictions: Eligibility, Collateral and Delivery Requirements; and B5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral RequirementsB5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral Requirements.

Refer to the  Eligibility Matrix  for allowable CLTV ratios.

An LLPA applies to certain mortgages with subordinate financing. These LLPAs are in addition to any other price adjustments that are otherwise applicable to the particular transaction. See the  Loan-Level Price Adjustment (LLPA) Matrix.