High Combined Loan-to-Value, or HCLTV, represents the total debts secured by your home—including your primary mortgage and any additional loans such as home equity lines of credit (HELOCs) or second mortgages—relative to your property’s current appraised value. Unlike the basic Loan-to-Value ratio (LTV), which accounts only for the outstanding balance of the primary mortgage, HCLTV includes the full credit limits of all secondary financing.
This ratio matters because lenders want to understand their maximum exposure if you default on your loans. For example, if you have a $350,000 mortgage and a $50,000 HELOC credit limit on a home appraised at $500,000, your HCLTV is calculated as ($350,000 + $50,000) ÷ $500,000 = 80%. This “high” CLTV number factors in the worst-case scenario where you could draw the full HELOC amount immediately, increasing the loan balance significantly.
It’s crucial to note the distinction between Combined Loan-to-Value (CLTV) and High Combined Loan-to-Value (HCLTV). While CLTV uses the current outstanding balance on your HELOC, HCLTV considers the total available credit limit, which tends to be higher and thus reflects higher risk.
Lenders rely on HCLTV to make lending decisions because a high ratio indicates less equity and higher risk for foreclosure losses. Typically, an HCLTV over 80% may require you to pay Private Mortgage Insurance (PMI) or result in higher interest rates. Managing your HCLTV by paying down debt or increasing your home’s value can improve your mortgage options.
For more detailed explanations, see our glossary entries on Loan-to-Value Ratio (LTV) and Home Equity Line of Credit (HELOC).
Sources:
- Fannie Mae Selling Guide B2-1.2-03: Combined Loan-to-Value (CLTV) and High-Combined Loan-to-Value (HCLTV) Ratios
- Consumer Financial Protection Bureau: What Is Loan-to-Value (LTV)?
- Investopedia: Combined Loan-to-Value (CLTV) Ratio
