Season 1 curriculum
Free roomThe Glossary - Learn the Language6 min · Janice

Lesson 2 · Glossary lesson

LTV, CLTV, and HCLTV

Explain why a second lien or HELOC can change a file even when the first loan looks fine.

Scenario

A borrower says they are putting 10% down, but there is also a second lien in the structure.

Learner Outcome

The member can distinguish first-lien LTV, combined liens, and HELOC exposure.

Skool summary

The collateral math stack: LTV is the first lien, CLTV adds closed-end seconds, HCLTV includes HELOC limits.

1

Plain-English definition

LTV compares the first mortgage to the property value. CLTV compares all closed-end liens to the property value. HCLTV adds the maximum line amount of a HELOC, even if the borrower has not drawn the whole line.

2

Why it matters

Product eligibility, mortgage insurance, pricing, and risk appetite can all change when subordinate financing enters the file. A file can look clean at first-lien LTV and still fail the combined exposure test.

3

Partner language

Say: 'The first mortgage is only one layer. We also have to count what the property is securing behind it.'

Homework

  • Calculate all three ratios on a sample $500,000 purchase with a $400,000 first and $50,000 HELOC.