HELOC Balances and Mortgage Ratios

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Fannie Mae’s combined loan-to-value (CLTV) calculation counts drawn HELOC principal; its home equity combined loan-to-value (HCLTV) calculation counts the full line. Both also include the first mortgage and closed-end subordinate principal.

Consider fictional purchase snapshots: $400,000 price and appraisal, $280,000 first mortgage, $20,000 closed-end subordinate principal, and a $60,000 home equity line of credit (HELOC) with $20,000 drawn. No other liens.

CLTV is ($280,000 + $20,000 + $20,000) ÷ $400,000 = 80%. HCLTV uses $60,000 instead of $20,000: $360,000 ÷ $400,000 = 90%.

Change only drawn principal to $10,000 after a paydown: CLTV becomes 77.5%, but HCLTV remains 90%. Repaying borrowed money has not reduced the line’s limit.

Alternatively, retain the original $20,000 balance but assume a documented permanent limit reduction to $40,000. HCLTV becomes 85%; CLTV stays 80%.

Confirm balances, the permanent limit and applicable program rules with your lender. A requested reduction is not a completed modification. These ratios alone establish neither approval nor affordability.