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Combined Loan-to-Value (CLTV) represents the total of all liens secured by the property as a percentage of the property’s value, not just the first mortgage. CLTV is essential for understanding the complete debt structure against a property and is particularly important when multiple loans or lines of credit are secured by the same collateral. While LTV focuses solely on the first mortgage, CLTV provides a comprehensive view of all debt obligations secured by the property. This is critical because in the event of foreclosure, all lienholders have claims against the property, and the total debt amount relative to property value determines the lender’s risk exposure and the borrower’s equity position.

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Calculation

CLTV = (First Mortgage + Second Mortgage + HELOC + Other Liens) / (Property Value) × 100
CLTV includes the first mortgage, any second mortgages, home equity lines of credit (HELOCs), and any other liens that are secured by the property. The property value used is typically the current appraised value or purchase price, whichever is lower, similar to LTV calculations. Example:
  • Property value: $500,000
  • First mortgage: $400,000 (80% LTV)
  • HELOC: $50,000
  • Total liens: $450,000
  • CLTV: 90%

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CLTV importance and applications

CLTV is crucial for several loan scenarios. When originating second mortgages or HELOCs, lenders need to understand the total debt against the property to assess their position in the lien hierarchy and the borrower’s remaining equity. Higher CLTV ratios increase risk for subordinate lienholders because they have lower priority in foreclosure proceedings. For refinance transactions, CLTV determines whether the borrower has sufficient equity to qualify and what loan terms are available. Cash-out refinances are particularly sensitive to CLTV limits, as lenders want to ensure borrowers maintain adequate equity after extracting cash. Many loan programs establish maximum CLTV limits that are stricter than LTV limits, recognizing that multiple liens increase overall risk. CLTV also affects pricing, with higher CLTV ratios typically resulting in higher interest rates or additional fees to compensate for increased risk. Borrowers seeking to maximize cash-out amounts or combine multiple loans must carefully consider CLTV constraints and their impact on loan terms and costs.