Reduced Maximum Loan-to-Value (LTV / CLTV)

Freddie Mac and Fannie Mae have recently announced reduced maximum LTV / CLTV (Loan-to-Value) ratios for certain Standard Conforming loans:

• Cash Out for 1- to 2-unit owner-occupied properties
• Purchase and No Cash Out for 2- to 4-unit owner-occupied properties
• Purchase, No Cash Out and Cash Out for second homes
• Purchase, No Cash Out and Cash Out for 1- to 2-unit investment properties.

 

LTV
The Loan-to-Value (LTV) is calculated by dividing the loan amount into the Sales Price or Appraised Value, whichever is lower. For refinance loans, it is calculated by dividing the loan amount into the appraised value.

CLTV
The Combined Loan-to-Value (CLTV) is calculated by dividing the total of the Loan Amount and any additional subordinate financing into the Sales Price or Appraised Value, whichever is lower, or simply into the appraisal value for refinance loans

 
Many Banks have the following Maximum LTV’s / CLTV’s and Loan Limits*:

 Standard Conforming – Full Documentation – Fully Amortized  

One – Four Unit Single Family (attached or detached) One Unit PUD and Condo (attached & detached) Occupancy Loan Amt Limits Purchase Max LTV/CLTV No Cash Out Max LTV/CLTV Cash Out Max LTV/CLTV Primary Residence 1 Unit $417,000 95% / 95% 95% / 95% 85% / 85%1,A 2 Units $533,850 80% / 80% 80% / 80% 75% / 75% 3 Units $645,300 75% / 75% 75% / 75% 75% / 75% 4 Units $801,950 75% / 75% 75% / 75% 75% / 75% Second Home 1 Unit $417,000 85% / 85%1 85% / 85%1 75% / 75% Non-Owner 1 Unit $417,000 80% / 85% 75% / 75% 75% / 75% 2 Units $533,850 75% / 75% 75% / 75% 70% / 70% 3 Units $645,300 75% / 75% 75% / 75% 70% / 70% 4 Units $801,950 75% / 75% 75% / 75% 70% / 70% General Notes: Minimum FICO credit score of 620 is required. Maximum Debt-to-Income Ratio of 60% is required for properties located in MA or MN. Cash Out Transactions are not permitted in the states of Texas and New Mexico.     Loans with an LTV greater than 80% must meet the following requirements: Maximum Debt-to-Income Ratio of 55%, except where the following is required: 1 Maximum Debt-to-Income Ratio of 41%. Minimum FICO credit score of 680 is required. Secondary financing (second mortgage) is not permitted. Attached PUD and Condominiums are ineligible. Construction-to-Perm financing is permitted only on 1-Unit Primary Residence Purchase and No Cash Out transactions. Cash Out Requirements: Cash Out transactions require 12 month seasoning and ownership history. The maximum Cash Out permitted is $150,000. This limit includes the balance of any non-rate and term items paid off with the subject loan. Declining Market Notes: A Maximum LTV of 80%. Properties located in Florida: Maximum LTV of 90%. Maximum LTV of 80% when occupancy is Second Home. Minimum FICO Credit Score Requirements: Minimum FICO of 720 when the LTV is greater than 85%. Minimum FICO of 700 when the LTV is greater than 80% and less than or equal to 85%.

Super Conforming (Jumbo) – Full Documentation – Fully Amortized  

One Unit Single Family (attached or detached) One Unit PUD (attached & detached) Occupancy Purchase Max LTV/CLTV No Cash Out Max LTV/CLTV Minimum FICO Purchase and No Cash Out Cash Out Max LTV/CLTV Minimum FICO Cash Out Primary Residence 1 Unit 90% / 90% 90% / 90% 720 75% / 75% 720 85% / 85%A 85% / 85%A 700 75% / 75% 75% / 75% 660 Second Home 1 Unit 60% / 60% 60% / 60% 660 - - Non-Owner 1 Unit 60% / 60% 60% / 60% 660 - - General Notes: Maximum Debt-to-Income Ratio: 45% No 30-day late housing payments in the last 12 months. Seasoning Requirements: Refinance transactions require a minimum of 6 months seasoning (i.e. six payments made) since the most recent refinance or date of purchase. Reserve Requirements (checking, savings, CD, 401K, IRA…): Primary Residence Transactions: 2 months PITI (principal, interest, tax, insurance) Second Home and Non-Owner Occupied Transactions: 6 months PITI. Reserves are required to be liquid reserves and are exclusive of closing costs and cash-out received. Maximum Cashout: The maximum cash out permitted is $100,000. This limit includes the balance of any non-rate and term items paid off with the subject loan. An additional Field Review is required for loans with both 75% LTV/CLTV or greater and $1 million property value or greater. Construction-to-Perm financing and newly-built homes (appraisal marked proposed construction or under construction) are not permitted.   Loans with an LTV greater than 80% must meet the following requirements: Must be submitted to Desktop Underwriter. Secondary financing is not permitted. Attached PUDs are ineligible. Reserve Requirements: 6 months PITI reserves are required for each property owned including the subject property. Declining Market Notes: A Minimum FICO credit score of 720 is required when the LTV is greater than 80%.

*Some Banks that don’t use Freddie Mac and Fannie Mae platform permit cash out refinance up to 90% LTV for 1 unit primary residence with minimum 650 credit score without PMI and interest rate adjustment (up to 750K loan amount). HELOC (home equity line) – up to 350K, maximum 80% LTV