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Other over-80% LTV loan options exist as well. Conforming loans above 80% are allowed but typically require private mortgage insurance. #What does le stand for in mortgage loan terms mac#In the United States, conforming loans that meet Fannie Mae and Freddie Mac underwriting guidelines are limited to an LTV ratio that is less than or equal to 80%. ![]() The CLTV is 75%.Ĭombined loan to value is an amount in addition to the Loan to Value, which simply represents the first position mortgage or loan as a percentage of the property's value.Ĭountries United States A similar property with a value of $100,000 with a first mortgage of $50,000 and a second mortgage of $25,000 has an aggregate mortgage balance of $75,000. For example, a property valued at $100,000 with a single mortgage of $50,000 has an LTV of 50%. Distinguishing CLTV from LTV serves to identify loan scenarios that involve more than one mortgage. The aggregate principal balance(s) of all mortgages on a property divided by its appraised value or purchase price, whichever is less. When "combined" is added, it indicates that additional loans on the property have been considered in the calculation of the percentage ratio. The term " combined loan to value" adds additional specificity to the basic loan to value which simply indicates the ratio between one primary loan and the property value. The loans with LTV ratios higher than 100% are called underwater mortgages.Ĭombined loan to value ratio (HTV PSV) Ĭombined loan to value ratio (CLTV) is the proportion of loans (secured by a property) in relation to its value. #What does le stand for in mortgage loan terms full#Full financing, or 100% LTV, is reserved for only the most credit-worthy borrowers. Higher LTV ratios are primarily reserved for borrowers with higher credit scores and a satisfactory mortgage history. Low LTV ratios (below 80%) carry with them lower rates for lower-risk borrowers and allow lenders to consider higher-risk borrowers, such as those with low credit scores, previous late payments in their mortgage history, high debt-to-income ratios, high loan amounts or cash-out requirements, insufficient reserves and/or no income. Lenders can require borrowers of high LTV loans to buy mortgage insurance to protect the lender from the buyer's default, which increases the costs of the mortgage. Therefore, as the LTV ratio of a loan increases, the qualification guidelines for certain mortgage programs become much more strict. The risk of default is always at the forefront of lending decisions, and the likelihood of a lender absorbing a loss increases as the amount of equity decreases. Loan to value is one of the key risk factors that lenders assess when qualifying borrowers for a mortgage. 2 Combined loan to value ratio (HTV PSV). ![]()
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