© 2018 Fannie Mae Single Family Selling Guide
Calculation of the LTV Ratio
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The rounding rules noted above also apply to the CLTV and HCLTV ratio calculations. Lenders' systems must contain rounding methodology that results in the same or a higher LTV ratio.
| Underwriting Method | Type of Transaction | Calculation of the LTV Ratio1 |
|---|---|---|
| Manual and DU | Purchase money transactions | Divide the original loan amount by the property value. (The property value is the lower of the sales price or the current appraised value.) |
| Manual and DU | Refinance transactions | Divide the original loan amount by the property value. (The property value is the current appraised value.) |
| Manual | Co-op share loans | See Calculating the LTV ratio for Co-op Share Loans |
| in B4-2.3-04, Loan Eligibility for Co-op Share Loans. | ||
| Manual and DU | Mortgages with financed mortgage insurance | Divide the original loan amount plus the financed mortgage insurance by the property value. (The property value is the lower of the sales price or the current appraised value.) |
Note: The LTV ratio calculations shown above 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 B5-3.3-01, HomeStyle Energy for Energy Improvements on Existing Properties; B5 B5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations; B5 B5-5.1-02, Community Seconds Loan Eligibility; B5 B5-5.1-04, Community Land Trusts; B5 B5-5.3-03, Loans with Resale Restrictions: Underwriting and Collateral Considerations; and B7and B7-1-01, Provision of Mortgage Insurance.
Refer to the Eligibility Matrix for maximum allowable LTV ratios.
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An LLPA may apply to certain mortgages based on the LTV ratio and representative credit score. 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.
| Announcements | Issue Date |
|---|---|
| Announcement SEL-2016–03 | March 29, 2016 |
| Announcement SEL-2016–02 | February 23, 2016 |
| Announcement SEL-2013–07 | September 24, 2013 |
| Announcement SEL-2013–03 | April 9, 2013 |
| Announcement SEL-2011–03 | March 31, 2011 |
| Announcement SEL-2010–16 | December 1, 2010 |
| Announcement SEL-2010–01 | March 2, 2010 |
| Announcement 09–32 | October 30, 2009 |
1As defined in the Glossary E-3-15, Glossary of Fannie Mae Terms: O, the original loan amount is the amount of the loan as indicated by the note.Additional Information: https://www.fanniemae.com/content/guide/selling/b2/1.1/01.html