## What is combined loan-to-value ratio?

Combined loan-to-value ratio, or CLTV, is a borrower’s overall mortgage debt load, expressed as a percentage of the home’s fair market value.

## Deeper definition

When someone is buying a home, a lender will look at the loan-to-value (LTV) ratio. This is calculated by taking the appraised value and dividing that into the amount of the loan the borrower seeks. The maximum mortgage for a home purchase is typically 90 percent to 95 percent, depending on the program. Combined loan-to-value is used when there is more than one mortgage, such as the primary mortgage and an equity line of credit. The combined loan-to-value ratio is the total of both loans added together and then divided into the appraised value.

## Combined loan-to-value ratio example

The first step to determining combined loan-to-value ratio is to know the appraised value of a home. Let’s take a home worth \$500,000, for which the buyer took out a primary mortgage of \$250,000. The buyer later took out a home equity loan of \$100,000. Here is how the combined loan-to-value ratio would be calculated:

• Primary mortgage (\$250,000) + home equity loan (\$100,000) = \$350,000
• Total mortgage debt = \$350,000 / appraised value (\$500,000) = 0.7 or 70 percent CLTV

Thinking about taking out a home equity loan? Use Bankrate’s rate tables to shop around for the best rates.

## Other Mortgages Terms

##### Guaranteed mortgage

Guaranteed mortgage is a term every borrower should know. Bankrate explains it.

##### Shared appreciation mortgage

Shared appreciation mortgage is a term worth understanding. Bankrate explains it.

##### Home Keeper

Home Keeper is a defunct reverse mortgage program. Learn more at Bankrate.com.

##### Life cap

Life caps limit the amount your interest rate can increase. Bankrate explains.

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