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© 2018 Fannie Mae Single Family Selling Guide

Calculation of the CLTV Ratio

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 B2see B2-1.1-03, Home Equity Combined Loan-to-Value (HCLTV) Ratios.)

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.

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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 B3See B3-6-02, Debt-to-Income Ratios, for additional information.)

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Note: The CLTV ratio calculation may differ for certain mortgage loans. For details on these differences, see B2see B2-1.2-05, Payoff of Installment Land Contract Requirements; B5 B5-2-03, Manufactured Housing Underwriting Requirements; B5 B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions; B5 B5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations; B5 B5-3.3-01, HomeStyle Energy for Energy Improvements on Existing Properties; B5 B5-5.1-02, Community Seconds Loan Eligibility; B5 B5-5.1-04, Community Land Trusts; and B5and B5-5.3-03, Loans with Resale Restrictions: Underwriting and Collateral Considerations.

Refer to the Eligibility Matrix for allowable CLTV ratios.

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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.

Related Announcements

The table below provides references to the Announcements that have been issued that are related to this topic.

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