1. What is Combined Loan-to-Value Ratio?

The Combined Loan-to-Value (CLTV) ratio is a financial metric used by lenders to assess the risk of a mortgage loan. It represents the percentage of a property's value that is secured by loans.

2. How Does the Calculator Work?

The calculator uses the CLTV formula:

Where:

• First Mortgage — The primary mortgage amount in dollars
• Second Mortgage — Any additional mortgage or home equity loan in dollars
• Property Value — The current appraised value of the property in dollars

Explanation: The equation calculates what percentage of the property's value is covered by all loans.

3. Importance of CLTV Calculation

Details: Lenders use CLTV to determine loan eligibility and terms. Lower CLTV ratios generally mean better loan terms as they represent less risk to the lender.

4. Using the Calculator

Tips: Enter all amounts in dollars. Property value must be greater than zero. The calculator will compute the percentage of the property value that is financed by loans.

5. Frequently Asked Questions (FAQ)

Q1: What is a good CLTV ratio?
A: Typically, lenders prefer CLTV ratios below 80%. Higher ratios may require private mortgage insurance.

Q2: How does CLTV differ from LTV?
A: LTV only considers the primary mortgage, while CLTV includes all loans secured by the property.

Q3: Why is CLTV important for refinancing?
A: Many refinance programs have maximum CLTV requirements that borrowers must meet to qualify.

Q4: Can CLTV exceed 100%?
A: Yes, if the total loan amounts exceed the property value, though this is considered high risk.

Q5: How often should I check my CLTV?
A: It's good to check whenever considering new loans against your property or when property values change significantly.