Combined loan-to-value (CLTV) is every loan on a home added together, divided by the home's value. Plain loan-to-value (LTV) looks only at the first mortgage, so the two numbers match when there's one loan and split apart the moment a second mortgage joins it.
That second mortgage is usually down payment assistance. It's why a buyer can show an LTV of 96.5% and a CLTV of 100% on the same purchase.
Why lenders track both numbers
Each number answers a different question. LTV tells the lender how much of the home its own loan covers, and it drives the mortgage insurance and the program's financing limit. CLTV tells the lender how much of the home is borrowed in total once the assistance second is counted.
FHA allows a governmental entity, meaning a federal, state or local agency or a housing finance agency, to provide the buyer's 3.5% minimum required investment as a second mortgage. Pair that with a 96.5% FHA first and the CLTV reaches 100%. FHA works out both figures on the base loan, before the financed 1.75% upfront mortgage insurance premium.
Fannie Mae's Community Seconds program lets a government agency, housing finance agency, qualifying nonprofit, Federal Home Loan Bank or employer place a second behind a Conventional first. The CLTV can go as high as 105%, which leaves room for the second to pay some closing costs on top of the down payment.
Two $300,000 purchases, side by side
FHA 100% financing
- FHA first mortgage, 96.5%: $289,500
- Down payment assistance second, 3.5%: $10,500
- Total of both loans: $300,000
- CLTV: $300,000 divided by $300,000 = 100%
Mortgage insurance is figured on the $289,500 first only. The upfront premium is 1.75% of $289,500, or $5,066.25, financed into the loan. The annual premium is 0.55% of $289,500, which is $1,592.25 a year, or $132.69 a month.
Conventional with a Community Seconds loan
- Conventional first, 97%: $291,000
- Community Seconds loan covering the 3% down payment ($9,000) and $4,500 of closing costs: $13,500
- Total of both loans: $304,500
- CLTV: $304,500 divided by $300,000 = 101.5%, inside the 105% ceiling
The CLTV sits above 100% here because the assistance went past the down payment and into closing costs.
What a high CLTV means for you
A high CLTV is how a buyer with steady income and little saved gets into a home now. Each second carries its own terms. Some are deferred until you sell or refinance, some are forgiven over time, and some have a small monthly payment that counts in your debt-to-income ratio. Ask which kind you're getting before you sign, because a repayable second changes the payment you qualify on.
The cash to close calculator shows what's left to bring once a second covers the down payment. To see which assistance programs pair with your price and income, call AAA Capital Funding at 888-601-8344.