How to Calculate Cltv

Combined Loan-to-Value (CLTV) Calculator

Use this calculator to determine your property's Combined Loan-to-Value (CLTV) ratio, a crucial metric for lenders when evaluating risk for second mortgages, home equity lines of credit (HELOCs), or refinancing.

function calculateCLTV() { var firstMortgageBalance = parseFloat(document.getElementById('firstMortgageBalance').value); var secondMortgageBalance = parseFloat(document.getElementById('secondMortgageBalance').value); var otherLiensBalance = parseFloat(document.getElementById('otherLiensBalance').value); var appraisedValue = parseFloat(document.getElementById('appraisedValue').value); var resultElement = document.getElementById('cltvResult'); if (isNaN(firstMortgageBalance) || isNaN(secondMortgageBalance) || isNaN(otherLiensBalance) || isNaN(appraisedValue)) { resultElement.innerHTML = "Please enter valid numbers for all fields."; return; } if (firstMortgageBalance < 0 || secondMortgageBalance < 0 || otherLiensBalance < 0) { resultElement.innerHTML = "Mortgage and lien balances cannot be negative."; return; } if (appraisedValue <= 0) { resultElement.innerHTML = "Property's Appraised Value must be greater than zero."; return; } var totalLoanAmount = firstMortgageBalance + secondMortgageBalance + otherLiensBalance; var cltv = (totalLoanAmount / appraisedValue) * 100; resultElement.innerHTML = "" + cltv.toFixed(2) + "%"; } .cltv-calculator-container { font-family: 'Segoe UI', Tahoma, Geneva, Verdana, sans-serif; background-color: #f9f9f9; padding: 25px; border-radius: 10px; box-shadow: 0 4px 12px rgba(0, 0, 0, 0.1); max-width: 600px; margin: 30px auto; border: 1px solid #e0e0e0; } .cltv-calculator-container h2 { color: #2c3e50; text-align: center; margin-bottom: 20px; font-size: 1.8em; } .cltv-calculator-container p { color: #34495e; margin-bottom: 15px; line-height: 1.6; } .calculator-form .form-group { margin-bottom: 18px; } .calculator-form label { display: block; margin-bottom: 8px; color: #34495e; font-weight: bold; font-size: 0.95em; } .calculator-form input[type="number"] { width: calc(100% – 22px); padding: 12px; border: 1px solid #ccc; border-radius: 6px; font-size: 1em; box-sizing: border-box; transition: border-color 0.3s ease; } .calculator-form input[type="number"]:focus { border-color: #007bff; outline: none; box-shadow: 0 0 5px rgba(0, 123, 255, 0.3); } .calculate-button { display: block; width: 100%; padding: 14px; background-color: #28a745; color: white; border: none; border-radius: 6px; font-size: 1.1em; font-weight: bold; cursor: pointer; transition: background-color 0.3s ease, transform 0.2s ease; margin-top: 25px; } .calculate-button:hover { background-color: #218838; transform: translateY(-2px); } .calculate-button:active { transform: translateY(0); } .result-container { background-color: #e9f7ef; border: 1px solid #d4edda; border-radius: 8px; padding: 15px 20px; margin-top: 30px; text-align: center; } .result-container h3 { color: #28a745; margin-top: 0; margin-bottom: 10px; font-size: 1.3em; } .result-container p { font-size: 1.6em; font-weight: bold; color: #2c3e50; margin: 0; } .result-container p strong { color: #007bff; }

Understanding Combined Loan-to-Value (CLTV)

The Combined Loan-to-Value (CLTV) ratio is a financial metric used by lenders to assess the total risk associated with all loans secured by a property, relative to the property's appraised value. Unlike the standard Loan-to-Value (LTV) ratio, which only considers the primary mortgage, CLTV takes into account all outstanding liens against the property, including first mortgages, second mortgages (like home equity loans or HELOCs), and any other junior liens.

Why is CLTV Important?

Lenders use CLTV to determine a borrower's eligibility for new loans, especially when applying for a second mortgage, a home equity line of credit (HELOC), or a refinance. A higher CLTV indicates greater risk for the lender because there is less equity in the property to cover all outstanding debts in the event of a foreclosure. For example, if you're seeking a HELOC, lenders will often have a maximum CLTV they are willing to approve, typically ranging from 80% to 90%.

How is CLTV Calculated?

The formula for CLTV is straightforward:

CLTV = (First Mortgage Balance + Second Mortgage Balance + Other Liens Balance) / Property's Appraised Value

The result is then multiplied by 100 to express it as a percentage.

• First Mortgage Balance: This is the outstanding principal balance on your primary home loan.
• Second Mortgage Balance: This includes the outstanding balance of any home equity loans, HELOCs, or other junior liens. For HELOCs, lenders typically use the maximum credit limit, not just the amount currently drawn, as the full amount could be drawn at any time.
• Other Liens Balance: This accounts for any other outstanding debts secured by the property, such as PACE loans (Property Assessed Clean Energy) or tax liens.
• Property's Appraised Value: This is the current market value of your home as determined by a professional appraisal.

What is a Good CLTV Ratio?

Generally, a lower CLTV ratio is more favorable. Most lenders prefer a CLTV of 80% or less for the best rates and terms on new loans or refinancing. A CLTV above 80% might still be approved, but it could come with higher interest rates, additional fees, or require private mortgage insurance (PMI) if it's a first mortgage refinance. For second mortgages or HELOCs, lenders often cap their CLTV at 85% or 90%.

Example Usage:

Let's say you have the following details:

• First Mortgage Balance: $200,000
• Second Mortgage Balance (HELOC): $50,000 (assuming this is the maximum credit limit)
• Other Liens Balance: $0
• Property's Appraised Value: $350,000

Using the calculator:

CLTV = ($200,000 + $50,000 + $0) / $350,000

CLTV = $250,000 / $350,000 = 0.71428...

CLTV = 0.71428 * 100 = 71.43%

In this scenario, your CLTV would be approximately 71.43%, which is generally considered a healthy ratio by most lenders.